When localizing a brand name, companies need to pay attention to many factors, including phonetics, semantics, characters, tones, and local dialects. Daxue consulting has a proven four-step method for choosing a brand name in Chinese, which you can learn about here.

Different approaches to Chinese brand names in the pharmaceutical industry

There are several ways to choose Chinese brand names for foreign pharmaceutical brands. Just as when translating foreign names, companies can translate the name either according to its semantic meaning, or according to its phonetic sound. In some cases, it is possible to combine both methods into one translation.  

This case study includes the analysis of 10 companies in China’s pharmaceutical industry. Namely: GlaxoSmithKline Plc, Sanofi, Merck & Co Inc, F Hoffmann-La Roche Ltd, Johnson & Johnson, Bayer AG, AbbVie Inc, AbbVie Inc, Pfizer Inc and Eli Lilly and Co. It includes the analysis of how they choose a Chinese brand name, as well as the names of their products in the Chinese market.

Phonetic translations

Phonetic translation is the easiest way for translation and the most common localization method. A common slip up is when companies simply transliterate their name without thinking about the meaning and sound of the characters. As a result, the character choices, while having a good sound, may have unfit meanings or tones that do not roll of the tongue easily. However, when giving Chinese brand names in the pharmaceutical industry, companies often use this method, combined with choosing the right characters, as it is a very specific market.

GlaxoSmithKline Plc

Source: GSK, GSK website page in Chinese

Original name of this English company is GlaxoSmithKline Plc. In Chinese the brand has the name “葛兰素史克” (“Gelansushike”) / GSK.

Its antiviral medicine Viread in Chinese has the name: “韦瑞德” (“Weiruide”), which sounds similar to the original name.

Such as in this case, the original foreign name has sounds that do not exist in Mandarin, such as the V sound. However, “V” sounds in brand or product names are often transcribed to “W” in Mandarin.

Sanofi

Source: Sanofi, Sanofi website page in Chinese

The French company Sanofi in Chinese has a name “赛诺菲” (“Sainuofei”).

Its antiepileptic medicine Depakine in Chinese is “德巴金” (“Debajin”). “De” might give an impression of “Germany”. However, the French flag is on the packaging, conveying a message that the product made in France.  

Source: Taobao, Depakine in the Chinese market

Merck & Co Inc

Source: Merck, Merck website page in Chinese

The Chinese name of the American company Merck & Co Inc is “默克” (“Moke”). Their popular product Vigantol does not have a Chinese name. Some overseas flagship stores sell this product and it receives hot discussion on social media. 

Source: Taobao, Vigantol in the Chinese market

F Hoffmann-La Roche Ltd

Source: La Roche, La Roche website page in Chinese

A company La Roche from Switzerland has its Chinese name “罗氏” (“Luo Shi”). Some of their products also have names based on phonetic approach. For example, the product Rocaltrol which contains vitamin D metabolites, in Chinese has a name “罗盖全” (“Youjiale”). It uses same character “Luo” as ”Luo” in the company name. Another La Roche product Madopar in Chinese is named “美多芭” (“Meiduoba”).

Johnson & Johnson

American company Johnson & Johnson does not use phonetic approach for its brand naming in China. However, it applies this approach to some of its products. For example, Band-aid in Chinese sounds like  “邦迪” (“Bangdi”). Another product which original name is Motrin has “美林” （ “Meilin”) as a Chinese name.

Source: Taobao, Band Aid and Motrin in the Chinese market

Bayer AG

Source: Bayer AG, Bayer website page in Chinese

German pharmaceutical company Bayer in Chinese sounds like “拜耳” (“Bai Er”). Besides, some of Bayer China’s products also named based on the phonetic approach. For example, Bayaspirin has its Chinese name “拜阿司匹灵” (“Baiasipiling”). It uses same character “Bai” as ”Bai” in the company name. Its product Canesten also has a Chinese name  “凯妮汀”（ “Kainiting”), which sounds similar to the original.

AbbVie Inc

Source: AbbVie, AbbVie website page in Chinese

American company AbbVie in Chinese has a name   “艾伯维” (“Aibowei”). However, most of its products name represent “phonetic + evocative” approach.

Novartis

Novartis which based in Switzerland does not use phonetic approach to its brand name in China. However, its products Diovan has Chinese name “代文”(“Dai Wen”), which sounds close to original.  Same for Trileptal with the Chinese name: “曲莱” (“Qu Lai”).

Source: Baozhilin, Diovan and Trileptal in the Chinese market

Phonetic approach for prescription drugs

All drugs mentioned previously are  over-the-counter drugs, meaning they are aimed at ordinary consumers and their names are casual-sounding, to be clearer for customers. However, for comparison, we also looked at prescription drugs, where the marketing is not just directed to consumers, but also medical professionals. What is interesting thing is that some companies adapt their names of prescription drugs for the Chinese market in not-professional-sounding, rather casual-sounding way.

AbbVie Inc

AbbVie’s medicine Zemplar, which helps to treat secondary hyperparathyroidism in people with chronic kidney failure, has a Chinese name “胜普乐” (“Shengpule”). “Sheng” means “victory”, “Pu” means “common” and “Le” means “happiness”. As we can see, it has no connection with the effect which this drug has or with ingredients it contains.

Another drug Humira, which used to treat arthritis, Crohn’s disease and psoriasis, in the Chinese market has a name “修美乐” (“Xiumeile”). It sounds close to original and has positive meaning: “Mei” and “Le” mean “happy” and “beautiful”.

Source: Taobao, Humira in the Chinese market

Sevofrane’s name in Chinese is “喜保福宁” (“Xibaofuning”) “Xi”, “Bao”, “Fu”, “Ning” are all positive words standing for happiness, safe and good health. It is a volatile liquid anesthetic, used during serious operations. The name sounds surprisingly casual and light-hearted considering the seriousness of the product.

Eli Lilly and Co

This company produces Olumiant, which helps to reduce pain and stiffness in Chinese sounds like “艾乐明” (“Aileming”).  “Le” means “happy” and “Ming” means “bright”. The name conveys a positive message.

Pfizer Inc

Calcium channel blocker Norvasc in Chinese sounds like “络活喜” (“Luohuoxi”). “Luo” means “Merridian”, “Huo” means “alive” and “Xi” means “happiness”. “Luohuoxi” conveys a positive message and might be reliable in curing heart diseases and unblock blood vessels. It also has casual-sound name, although being a serious drug, which requires prescription.  

Source: Taobao, Norvasc in the Chinese market

Phonetic and evocative names

In case of “phonetic + evocative” method, translation covers not only the name itself, but also the signal that the product or service carries. Adaptation taking into account the meaning and sound is the most difficult and successful option, when the creators manage to preserve the pronunciation. Besides, they put the original meaning into the translation and avoid negative perception of images.

Sanofi

Sanofi also uses this approach. For example, its product Aprovel has a Chinese name “安博维” (“Anbowei”), where “an” means “safe”. 

Source: Taobao, Aprovel in the Chinese market

Merck & Co Inc

Merch also has some product names which combine phonetics and meaning. For instance, Glucophage has a Chinese name: “格华止” (“Gehuazhi”). “Zhi” means “stop”. Since the main function of the medicine is to deal with diabetes, “Zhi” means that the product can stop the disease and keep balance of body.

Another product Euthyrox has its Chinese name “优甲乐” (“Youjiale”). “You” and “Le” means great and happy. “Jia” is the same character with “Jia” in “Jiazhuangxian” (thyroid). It conveys a message that the product can do good to thyroid diseases.

Source: Taobao, Glucophage and Euthyrox in the Chinese market

F Hoffmann-La Roche Ltd

The product of this company Xeloda in Chinese sounds like “希罗达” (“Xiluoda”). It uses same character “Luo” as ”Luo” in the company name. “Xi” represents “hope”.

Source: Taobao, Xeloda in the Chinese market

Johnson & Johnson

Source: Johnson&Johnson, Johnson&Johnson website page in Chinese

Johnson & Johnson uses “phonetic + evocative” approach for its brand name in China. In Chinese it is “强生” (“Qiang Sheng”). “Qiang” means “strong” and “sheng” means “life”. “Qiangsheng” conveys a message of “make life stronger”. 

Same approach is for some products. For example, Acuvue’s Chinese name is “安视优” (“Anshiyou”).

“Anshiyou” stands for  “having stable and better eyesight”.

Bayer AG

Bayer uses this approach for Redoxon product. Chinese name is “力度伸” (“Lidushen”). “Lidu” means “strength and power”. “Shen” means “strengthen”. The name conveys a message that people can gain more power after eating the vitamin tablets.

Source: Taobao, Redoxon in the Chinese market

Novartis

Source: Novartis, Novartis website page in Chinese

The Chinese brand name of Novartis is “诺华” (“Nuo Hua”). “Nuo” means “promise” and “Hua” means “China”. Nuo Hua would like to make a promise to China, keep providing innovative products and contribute to the improvement of health and living quality of Chinese people.

Its product Lucentis’s Chinese name is “诺适得” (“Nuoshide”). “Nuoshide” adopt phonetic and evocative strategy by using the same character “Nuo” as the company name “Nuo Hua”.  “Shi” and “De” represent for “comportable”. 

Pfizer Inc

Pfizer has some products named according to “phonetic + evocative” approach. For instance, Diflucan’s Chinese name is “大扶康” (“Dafukang”). “Da” means “big”, “Fu” means “help” and “Kang” represents “a good health”. Another product Lipitor – “立普妥” (“Liputuo”) in Chinese. “Li” and “Tuo” stands for “a high speed”. “Liputuo” means that the problem can be solved in a short time.

Eli Lilly and Co

Source: Eli Lilly, Eli Lilly in the Chinese market

American brand Eli Lilly and Co is another example of combining semantics and meaning. Its Chinese name is  “礼来” (“Li Lai”).  “Li” means “courtesy and politeness” in Chinese and it is an important virtue in Chinese society.  “Lai” means “come”. “Li Lai” conveys a message that the company is gentle and is willing to do good to the Chinese society. This brand is also very special, because of its visual identity. Typography and name totally stand out from the competition in the Chinese market.  Their name is something that you would expect seeing in the hospitality industry for instance (“courtesy/politeness is coming”). Same for their typography, hand-written, as it relates to tailor-made/crafted/personalized products.

Source: JD, Ceclor in the Chinese market

Its products Ceclor’s Chinese name is “希刻劳”(“Xikelao”). “Xi” means “hope”. Zyprexa’s Chinese name is “再普乐” (“Zaipule”). “Zai” means “again” and “Le” means “happiness”. The name conveys a positive message. 

Phonetic and descriptive names

This approach to the Chinese brand names in the pharmaceutical industry means that the name gives a hint of the effect of the product. At the same time, there is a certain parallel in the phonetics of the word with the original name.

GlaxoSmithKline Plc

This company uses this approach to the Requip, which helps to treat Parkinson disease. The Chinese name is “力备” (“Li Bei”). “Li Bei” means to have the power, which can reflect the function to release Parkinson symptoms.

Source: Taobao, Requip in the Chinese market

AbbVie Inc

Its product Calcijex has a Chinese name: “溉纯” (“Gai Chun”). “Chun” stands for “pure”. Since the product is a liquid used for injection, it gives people a sense of pureness.

Descriptive

This approach to the Chinese brand names in the pharmaceutical industry adapts the brand name so that Chinese consumers understand what effect the product has. It doesn’t have to sound similar to the original name.

GlaxoSmithKline Plc

The example of this approach is company’s product Avamys. In Chinese it is “鼻眼适”(“Biyanshi”). “Biyanshi” means make both nose and eyes comfortable, which can represent the core function of the product.

Source: Taobao, Avamys in the Chinese market

Key Takeaways of pharmaceutical brand naming in Chinese

• Most of the Chinese brand names in the pharmaceutical industry apply phonetic approach. It could be explained by the fact that it is simpler and does not require spending time finding the characters that convey the essence of the product.
• Some companies in the pharmaceutical industry in China use “phonetic + evocative” approach. It helps Chinese customers to better understand what effect product has. However, it is harder to come up with the brand name which sounds similar in Chinese language and has a clear meaning.
• The descriptive approach helps Chinese customers to better understand the product, but it has little correlation with the original brand name.

Vitamin and health supplements market report by daxue consulting from Daxue Consulting

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Overview of the Chinese cosmetics market

China’s cosmetics performance in the global stage 

According to Euromonitor, China’s cosmetics market occupies 12.7% of the global cosmetics market, becoming the second-largest market after the US.

Data source: Euromonitor, Top 10 cosmetics markets globally

Even after several years of market expansion, the market still seems to have a fine potential for growth in the future. According to Euromonitor, the CAGR of the Chinese cosmetics market is the highest in the world.

Data source: Euromonitor, Top 10 cosmetics market ranked by CAGR

Based on data from the National Bureau of Statistics, the yearly growing pace is remaining at about 10% since 2013 and the total retail sales reached 299.2 billion RMB in total. Hence, investing in such a large and consistent growing market can bring high revenue to the company.

Source: National Bureau of Statistics, Total cosmetics retail sales in China

Chinese domestic cosmetics brands are prospering

Cosmetics comprise a wide range of products like skincare, makeup and perfume. In the Chinese cosmetics market, skincare products are the main consumption force, and makeup products increased its market share year by year. Skincare products consistently accounted for over 50% of the Chinese cosmetics market. On top of this, makeup products have been continuously increasing since 2014.

Data source: Euromonitor, Cosmetics market distribution by category

Seven of the ten top cosmetics brands in China sare Chinese domestic cosmetics brands. The attention rate of Perfect Diary is far higher than other brands, meaning that a lot of cosmetics fans in China follow Perfect Diary.

Data source: QuestMobile New Media, Which Chinese domestic makeup brands are the most popular

Among the top 100 most popular cosmetics brands in China, 37% are Chinese domestic makeup brands.

Data source: QuestMobile New Media, Regional Distribution of top popular 100 brands

There are two cosmetics categories where Chinese domestic cosmetics brands have a strong position. These categories are essential skincare related products and eye make-up. Essential skincare products like hand cream, mask and cleanser have high daily consumption. Chinese domestic cosmetics brands could use price advantage to compete, through controlling the supply chain to lower cost. Besides, unique design helps Chinese domestic makeup brands make eyeshadow and eyebrow pencil hot products.

Data source: QuestMobile New Media Database, Origin of brands dominating China’s cosmetics market by product category

The rise of Chinese domestic makeup brands is correlated with sales promotions. According to Askci, 2 of the top 5 sales brands were Chinese domestic cosmetics brands during 618 shopping festival in 2020. Perfect Diary and Florasis ranked first and fourth respectively.

Data source: Askci, Cosmetics brands sold most during 618 shopping festival

Chinese cosmetics consumers portrait

According to data on Tmall and Taobao, consumers under 30 years old place most of cosmetics orders. Most of them are post-90 or even post-00. Students aged 18–22 made up over 25%, but their market share has decreased.

Data source: Tmall & Taobao, Chinese cosmetics consumers distribution by age

However, the share of consumers over 30 years old has an overall increase. This increase might because people aged over 30 gradually build and wake up the awareness of using skincare and makeup. Therefore, the demand for cosmetics among them goes up.

What Chinese domestic cosmetics brands consumers purchase most

According to the skincare top sales, Pechoin harvested 1,733 million RMB in sales, ranking first, followed by Chando and WIS, with 1,653 and 1,515 million RMB respectively.  

Data source: Tmall & Taobao, Top Chinese skincare brands

In the makeup market, top brands are different from top skincare brands, although some makeup brands provide cosmetics products. Perfect Diary maintained its performance and ranked first, with 2,762 million sales.

Data source: Tmall & Taobao, Top Chinese makeup brands

What makes Chinese domestic cosmetics brands different

Compared to foreign cosmetics brands, Chinese brands seem to put their eggs in more baskets. Their marketing efforts are spread through much more variety of activity and spread across many more platforms.

Creating a KOL marketing feedback cycle with short video apps, live-streams and KOLs

The rise of most Chinese domestic cosmetics brands attributes to social seeding through KOL marketing and cooperations. This feeds a feedback cycle where consumers give feedback on open platforms, where brands can then apply to their product development.

Data source: QuestMobile, Online marketing mode

Leverage traffic of multi-channel, post content in different forms

Traffic in multi-channel is other boost for the development of Chinese domestic cosmetics brands. It is common to market on Douyin, Kuaishou, Weibo, Wechat and Red, but each social platform has its own marketing strategy. On Douyin and Kuaishou, where people post short videos, brands cooperated with KOL to post makeup try-on, makeup tutorial and unbox testing. On Weibo, brands normally implement celebrity endorsement. On Wechat official account, brands post deep introduction of products. On Red, brands and KOLs post products-related tutorial.

Data source: QuestMobile, Online marketing in different forms

Launch cross-over products in big e-commerce promotion

Co-branding is more a strategy to get hold of targeted audiences who have complex behaviors. Through cooperating, brands can find a connection between consumers and brands. For example, Chando’s cooperation with Bilibili is a new try for its marketing strategy. As a place attracts most young generation, Bilibili provides a platform for Chando to increase consumers base.

Source: Chando, Chando X Bilibili

Unique marketing strategies for each Chinese domestic cosmetics brand

Perfect Diary, a textbook case for private traffic

Perfect Diary, established in 2016, is one of the young Chinese domestic brands. It targets 20-35 year old women, which is a high spending power group. In March 2017, it opened an online store on Taobao and Tmall. Half a year later, Perfect Diary opened on Red, WeChat store and hosted three Pop-up stores in Shanghai. In 2018, It established a Douyin and JD store. On January 19^th, 2019, it owned the first offline experience store in Guangzhou and expanded to 40 offline stores now.  

Behind Perfect Diary’s bold IP collaborations

IP cooperation is becoming a popular marketing method for domestic Chinese brands. Perfect Dairy cooperated with lots of IPs to launch new products. The most popular IP cooperation is with the Discovery channel.

Source: Tmall, Perfect Diary X Discovery

The history of Perfect Diary’s IP cooperation consists of three stages. In the first stage, Perfect Diary started to explore the market and launched fashion week related products. It reached celebrities, who have high credibility and cultivate the trust in the market. In the second stage which is the explosive phase, Perfect Diary cooperated with cross-over IP and KOLs to promote a single product. In this stage, it cooperated with makeup KOLs and reached to the followers, which increase the influencing power of brand. In the third stage where the brand continuously grew, it cooperated with mass and trendy IP. This cooperation helps to expand customers group, including people make-up beginners. 

Perfect Diary implements private traffic to build brand-owned traffic pool

Perfect Diary builds private traffic in two ways and uses two virtual BA (Beauty Advisor) to manage different types of consumers. Xiaowanzi (小完子) is in charge of consumers, who purchase online and joined through a lucky money card. Xiaomeizi (小美子) maintains the consumers who attracted from offline pop-stores or give aways. The source of customers is different, which requires two virtual BA to communicate customers in different tactics.  

Data source: Maoshihu, Process to reach Xiaowanzi

Florasis redefines the oriental cosmetics

Florasis’ sales performance is rising

Florasis was founded in March 2017 and opened its Tmall flagship store in August 2018. Although the sales for 2018 were only 43.19 million RMB, Florasis’ sales reached 1.1 billion RMB in 2019, rising nearly 25-fold. 

Florasis also presents an excellent in its first Double Eleven promotion. According to Mktindex, Florasis gained 220 million RMB sales and ranked fifth among the top 10 Chinese cosmetics brands that gained most sales.

Distinctly Asian makeup

As a chinoiserie cosmetics representative, the idea behind Florasis brand is ‘the Oriental makeup, using flowers to nourish the makeup look’. It includes everything from product ingredients to package design. Product ingredients highlight to use nature grasses and flower, and nourish the skin mildly. Package design and product name also filled with chinoiserie. For example, Florasis’s carved lipstick replicates the ancient Chinese carving technique and carved flowers on the lipstick, creating a precedent for the three-dimensional texture lipstick in China.

Source: Taobao, Florasis’s classical relievo

Pregnant woman friendly

Florasis gives people a safe and harm-free impression. It emphasizes that its products contain zero alcohol, zero-hormones and contains no harmful ingredients. An actor (Jiani Zhang) in Story of Yanxi Palace, which is a popular Chinese drama, recommended Florasis’ CC cushion. Zhang posted her using experience as a pregnant woman on Red, which drew most followers’ attention and discussion.

Source: Red, Jiani Zhang promoted Florasis’ product

Picking right KOL and spokesman

According to Baidu Index, the spokesman’s effect can be observed. On 3^rd March 2019, search word ‘花西子’ peaked because Justin Lee promoted Florasis’ loose powder. Another peak on 18^th May 2019 is because Florasis announce Jingyi Ju as spokesman. Jingyi and Florasis is a perfect match, because Jingyi owns high traffic and was known as the oriental beauty.

Data source: Baidu index, What increase the search of ‘Florasis’

Little Dream Garden, a black horse in the body care market

Targets ingredient-oriented consumers

Little Dream Garden is a Chinese cosmetic, focusing on developing body care products. It targets customers who care about the ingredients. Therefore, it emphasizes the ingredient and efficacy, naming product by main ingredient, such as Shea Butter body scrub and Ceramide body lotion.

Source: Taobao, Shea Butter body scrub

Posts testing video to build trust

Little Dream Garden leverages KOLs and KOCs to post product testing videos on Red, guiding users to join in the discussion. The opinion of KOL and KOC can increase trust rate and prompt consumers to buy the products.

Source: Red, Products testing video

How WIS involves celebrities on Weibo

WIS is a Chinese domestic skincare brand, created in 2011. It aims to provide scientific and effective products. It does not have any offline store so far. The brand targets consumers aged 18 -35 who have the strong social ability. For brand positioning, low-price capture lots of post-90 and post-00’s interest.

Source: Wechat, WIS products

Weibo is WIS’ social marketing asset

The popularity of WIS results from social marketing on Weibo. For example, a member of Happy family, Weijia Lee, recommended its product on Weibo, which attracted more than 240 million readers and brought around ten thousand followers for WIS. At the same time, celebrities, such as Jiu He and Na Xie, reposted the Weibo and reinforce the marketing effect.

Source: Weibo, Weijia Lee promoted WIS

What can brands learn from the success of Chinese domestic cosmetics brands

Although foreign cosmetics brands represented more than half of the cosmetic market in China, the rise of Chinese cosmetics cannot be overlooked. In fact, they can provide a learning opportunity on how to effectively appeal to Chinese consumers.

• Listen to the customers

Under short video App + Live Broadcast + KOL marketing mode, brands not only promote their products but also listen to the feedback from customers. Upgrading products according to the feedback is an important strategy to maintain brands’ sales performance.

• Pick the right brands for collaborations

Most Chinese domestic cosmetics brands implement cooperation with brands in different fields, celebrities and etc. to launch limited products. This campaign can bring the brands more consumers, strengthen brand image and increase brand volume.

• Promote in an appropriate form

Chinese cosmetics brands promote their products in different forms according to the character of a product. A testing video will gain more trust for a product that emphasizes its harmless ingredients. 

Learn more about the Chinese cosmetics and personal care market

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This article The rise of Chinese domestic cosmetics brands: Florasis, Little Dream Garden, WIS, and Perfect Diary is the first one to appear on Daxue Consulting - Market Research China.

Product Innovation: Fruit Tea & Soft European Bread Pairing

Nayuki introduced the “fruit tea and soft European bread pairing” as its signature product to the market. Although product pairing has been widely used in the retail industry, it was quite an audacious move for Nayuki to make. Most of Nayuki’s competitors in the industry, including Starbucks and Hey Tea, choose to stay “focused” and stick to one category only, no matter it is coffee or tea. With unique insights into the psychology of Chinese female consumers, Nayuki’s founder Peng Xin, however, considered “Fruit tea & European bread” a great combination that meet “two kinds of needs in a single scenario” and the sales number of the soft bread take up no less than 50% of Nayuki’s total sales nowadays.

Source: Sina Weibo, Nayuki’s soft European bread and tea pairing

Behind the success of Nayuki’s product innovations are its high-quality raw materials and stable supply chain. In order to ensure the quality and distinct taste of Nayuki’s products, Peng Xin and her team have visited and signed contracts with several renowned tea plantations across China and Taiwan. Nayuki has also built its own factories to manufacture fruit in season, which further enhanced the stability of its supply chain.

Aesthetic-Centered Marketing

Although China’s new style tea market is quite a large cake to share, getting a slice of it is not easy considering relatively low barriers to enter the industry and fierce competitions from both local and foreign companies in China. According to the white paper for 2019 new style tea consumptions co-published by Nayuki and 36kr, about half the consumers of new style teas in China belong to the post-90s generation and female consumers take up 70% of the market. Targeting a young and female-dominated market, Nayuki has been taking an aesthetic-centered marketing approach.

Nayuki has been working on a branding project called “Nayuki Cupseum” since 2019, which has been quite successful so far. The concept of the project is to exhibit artworks made by world-renowned artists using Nayuki teacups. So far, Nayuki has held three series of exhibitions which include “Big hugs to you” collaborating with American artist Christopher David Ryan during May 2020, “Being A Cat” with Pepe Shimada and “Ni Hao New Year” with Cinyee Chiu. Apart from the “Nayuki Cupseum” galleries, Nayuki cooperated with the 50th Anniversary of Anderson Lifetime Achievement Award in September 2019, during which every store would exhibit paintings of “The Ugly Duckling,” “The daughter of the sea,” and “Gorrila.”

Source: Nipic, Nayuki Poster

“Marketing isn’t just about advertising. Product development, space design, developing new techniques are all marketing,” according to Peng Xin, the founder of Nayuki. The emphasis on Nayuki’s aesthetic appeal is reflected on its physical stores as well, from lighting, to color tone, to location, all tailored to the needs of young female consumers, such as taking pictures inside the store to publish on social media. The in-store experience seems to be no less important than the quality of the tea itself for consumers. Nayuki is selling more than a cup of tea, but a whole package of experiences from purchasing online, to picking up at the store, to taking a selfie with its beautifully made teacup, which at its core is a reflection of a lifestyle ideal consumers have been longing to have.

Nayuki’s Cultural Appeal: The Arts of Cultural borrowing

Nayuki might strike consumers as a Japanese brand, but it is in essence a local Chinese company that borrowed a Japanese name. This should not come as a surprise as this kind of cultural borrowing is hardly an uncommon practice, especially in the fashion industry. The rising of Nayuki implies the strong influence of the Japanese cultural exports among Chinese consumers. Although tea-drinking culture originated from China and later exported to Japan, the Japanese tea-drinking culture has evolved a system of its own and become quite different from the modern-day Chinese tea-drinking culture. Therefore, taking on a Japanese brand image has facilitated Nayuki’s success by differentiating itself from other local Chinese beverage brands.

Post-Pandemic Age: What to Expect for Nayuki and China’s New style tea Market?

Although the coronavirus has been contained very well in China, consumption patterns have largely shifted from offline to online, which might continue to be the new normal until the vaccines come out. In the meanwhile, new challenges have been raised for the China’s new style tea market and brought new opportunities for Nayuki as well. In response to consumers’ expectations for a higher security standard, Nayuki has adopted a new operating mode that requires no direct human contact. According to Baidu index search frequency data, the search volume for Nayuki peaked in middle of the pandemic on April 1^st, during which Nayuki brought 3,000 free drinks to cheer up the doctors and nurses at the Leishen Mountain hospital in Wuhan.

Data Source: Baidu Index, Search Index for Nayuki from January to August 2020

The pandemic has also rushed China’s new style tea market into digital transformation. During the period when Covid-19 was at its peak in China, Nayuki offered free delivery for all online orders. As a result, the total number of transactions completed on Nayuki’s WeChat mini program have doubled compared to the previous year. However, such transformation requires both financial and technological support, which might imply a reshuffle of the market. Although major companies such as Hey Tea and Nayuki could probably make through the pandemic with enough funding to adjust to the new normal, small beverage stores might find it very difficult and eventually exit the market.

What we can learn from Nayuki’s success

• Nayuki conducted market research to precisely identify their target consumers, then focused their marketing tactics on them. Nayuki has a clear brand positioning that targets 25 to 29 year old women. Nayuki’s marketing campaigns such as the “Nayuki Cupseum” projects and art exhibits with the Anderson Lifetime Achievement Awards are both tailored to satisfy the cultural and aesthetic needs of a young female audience.
• Nayuki differentiated itself from the myriad of other new-style tea brands on the market with its product pairing and store aesthetic. Additionally, the brand borrowed a Japanese name which is unique and stands out.
• The tea-store used an O2O marketing strategy to establish online presence, which was especially useful during the COVID-19 pandemic. Consumers are raising their standards for safety and convenience, which is particularly important for brands to establish online presence during a pandemic. Relying on third-party platforms like WeChat, Nayuki realized digital transformation and made it through the pandemic.

Author: Isabella Li

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These are some of the successful case studies of brands that creatively appealed to Chinese millennials through nostalgia marketing.

Nostalgia marketing and co-branding in China

Whether it is a cartoon, a candy, or even characters from an textbook, items from childhood and teenage years tend to leave a strong impression on the emotions. A common practice of nostalgia marketing is to partner with a brand that is was dear to the target market during these formative ages.

Wang Wang x Nayuki (旺旺 hot kid x 奈雪の茶 Nai Xue’s Tea): Nostalgia marketing and co-branding in China

Wang Wang, a food maker known for rice crackers and flavored drinks from Taiwan, collaborate with Nayuki (also called Nai Xue’s Tea, a tea drink brand from Guangdong which is rated as one of the top 10 tea drink brands in China) in 2019. The Chinese snack brand aimed to let the target customers recall their happy childhood memories. Therefore, Wang Wang launched its collaborated products on Children’s day in 2019.

Source: naixuecha.com – Children’s day, come to Nayuki and become the luckiest kid

The resulting products from collaboration combined the characteristics both from Wang Wang and Nayuki, including milk flavored drinks, three different flavor of milk custard. Moreover, customer could redeem Wang Wang logo tea cups with consumption points. This brand collaboration went viral online and was very successful given its limited edition nature, which is why we included it in the 10 most epic marketing campaigns in 2019.

Nostalgia marketing strategies in China has proven to be successful. Moreover, nostalgia marketing often resonates with millennials, who are in the sweet spot for having a relatively materialistically rich childhood while having increasing spending power in adulthood. Hence, brands can leverage optimistic feelings and encourage consumers to make a purchase.

Wahaha x Zhongxuega (哇哈哈 x Chicecream 钟薛高): You are young today

The Wahaha Group Co., Ltd. is the largest beverage producer in China. AD calcium milk (AD钙奶) is one of their products carrying many memories of the post-80s and 90s generation. ‘Zhong Xuegao (Chicecream 钟薛高)’ was the three surnames from Hundred Family Surnames, which is an authentic Chinese ice-cream brand. The brand uses an unique Chinese tile design, supplemented by the top ‘back (回)’ pattern in Chinese, meaning ‘back’ to the original taste.

In March 2020, Wahaha and Zhongxuegao jointly launched AD calcium milk flavor ice cream ‘pre-adulthood ice cream’. The main target customer of the new ice cream are adults who have grown up but “don’t want to grow up”, mainly millennials and Gen Z.

Source: Socialone.com- AD calcium milk: Wahaha x Zhong Xuegao launched “Pre-adulthood ice cream” together.

Wahaha and Zhongxuegao made the flavor of ‘Pre-adulthood ice cream’ in layers, the first taste is rich, delicate with milk flavor. After that, Brazilian orange juice and French lemon puree bring fresh fruit flavor and restore the flavor of AD milk drink.

As Generation Z has become an emerging consumer force, domestic brand Wahaha has been trying to communicate with young people. AD calcium milk, as one of the largest IP of Wahaha, has a highly recognizable taste. As a famous product in the 1990s, AD calcium milk still reaches many generations.

Wahaha uses the marketing theme of ‘don’t want to grow up’ to label young people as ‘babies’ and arouse the resonance of more young people.

The cases of nostalgic marketing in China of these two F&B brands have attracted many consumers. The co-branding nostalgia marketing campaigns in China between brands from different industries also worked.

Nostalgia marketing and co-branding in China between brands from different industries

White Rabbit x Scent Library (大白兔x气味图书馆): Be a little bit childish

White Rabbit is a brand of milk-flavored candies. Originally from Shanghai, the brand has a history of more than 70 years. It cooperated with Scent Library, a domestic fragrance brand which is regarded as ‘National fragrance cleaning and care brand’ in 2019. They launched a variety of skincare and beauty products including perfume, fragrance, lotion and shower gel. All the products from the collaboration incorporate the White Rabbit’s signature milk candy flavor.

Like Wang Wang and Nai Xue’s milk tea, the co-branded products were strategically launched during Children’s Day, which triggered the feeling of nostalgia among millennial consumers. More than 14,000 collaborated products were sold out in the first 10 seconds after the collaboration was launched on Tmall on May 23rd, 2019. In addition, in the two months after rabbit launched its online store, the campaign generated 15 times increase in visit and 1.6 times increase in sales revenue.

Source: creative.adquan.com – White Rabbit x Scent Library: Be a little childish!

Scent Library is not White Rabbit’s only partner in Chinese nostalgia marketing. The candy brand also launched a limited-edition lip balm with Maxam (美加净) and milk-candy gift box with Agnes.b which did the test for its future brand co-operations. Through the nostalgia marketing campaigns in China, White Rabbit has capitalized on taste, smell, and appearance that has already left an impression on Chinese millennials during childhood. Now that their target market is all grown up, White Rabbit successfully morphed its brand image from an old brand to a classic, fashionable brand.

Wangyi Yanxuan x Hulu brothers (Yeation 网易严选 x Calabash brothers 葫芦兄弟)

Wangyi Yanxuan (Yeation 网易严选) was officially launched in April 2016. Yeation is a NetEase (网易, a Chinese Internet technology company),  e-commerce platform focused on furniture,   and embraces the brand concept  “good life, but not so expensive”. The Chinese name of the brand ‘Wangyi Yanxuan’ also refers to the meaning ‘NetEase helps you select strictly the products in high quality’.

Calabash Brothers (Hulu Brothers) is a Chinese cartoon series produced by Shanghai Animation Film Studio, which was very popular when it was broadcast in 1986-1987.

The cartoon is about a story of seven colored calabash brothers who protect the villagers and their grandpa from a Scorpion spirit and a Snake spirit.

Source: Official Weibo account of Wangyi Yanxuan, co-branding campaign with the Hulu Brothers

NetEase selected seven different functional beauty products according to each super power of the seven brothers.

The brother with great strength corresponds to the hand cream, so no friction will be generated (smooth skin) if the customers use the hand cream. Eye shadow corresponds to the brother with clairvoyant skills, while the brother with water skills corresponds to face mask for moisturizing. The brother with Invisibility skills corresponds to the makeup cushion product for hiding skin imperfections.

NetEase chose to create Calabash Brothers collection in the beauty category. The nostalgia marketing of NetEase instantly caught attention from customers through waking up their childhood memories, generating emotional resonance. Through this co-branding, NetEase not only attracted customer to create topics and contribute to the traffic for the brand, but also attracted fans of Calabash brothers cartoon, which boosted sales conversion.

Foreign brands apply nostalgia marketing campaigns in China

Mcdonald’s x Li Lei and Han Meimei： the classic characters from English textbook in China

Li Lei and Han Meimei were the two main characters in the English textbooks of junior high school published by People’s Education Publishing House from 1990 to 2000. These two characters accompanied a total of 100 million people in their English learning journey. As a result, the classic lines (as follows) have become Chinese millennials’ first impression of English.

Source: Slideserve.com – The characters that taught millions of Chinese how to greet in English

McDonald’s used this memory for reference and leveraged Li Lei and Han Meimei these two characters in the mini comic where they taught students how to order food in English. In the advertisement, Li Lei and Han Meimei went abroad with their classmates. Li Lei struggled to order food at McDonald’s because of his poor English while Han Meimei as a top student, teaches Li Lei how to order food.

The two familiar characters combine Chinese and McDonald’s elements, refining the original memories by blending the old with the new.

Source: Shangyexinzhi.com – China’s favorite English class characters order food in a McDonald’s ad

In the collaboration with ‘Li Lei and Han Meimei’, McDonald’s chose the topic of ‘Ordering food in English’, which is very consistent with its own brand tone and also a practical and interesting topic. Indeed, as one of the largest fast-food chains in the world, McDonald’s has about 30,000 subbranches around the world and the context of ordering in English in the ads fits the reality of many Chinese consumers traveling overseas.

KFC: Back to the price in 1987

In 1987, KFC opened its first store in China. On the brand’s 30th anniversary in China in 2017, KFC launched “back to the price in 1987” campaign, which triggered a wave of collective nostalgia. During a one-week campaign, the mashed potatoes cost only 0.8 yuan and the Original Recipe chickens cost only 2.5 yuan.

Source: Sohu.com – KFC launched ‘back to the price’ in 1987 campaign

Meanwhile, KFC started the topic of ‘I have the fried chicken, do you have a story to share?’ This marketing campaign became the trendy topic and got the traffic and sales for KFC at the same time.

From consumers’ point of view, the price was obviously favorable. Hence, customers invited their friends into the store and inadvertently ordered a lot of food as a salute to their happy childhood. Consequently, the campaign aroused customers to chat about their past youth on the social platform of KFC.

过去进行食 (The Continuous Past) Restaurant- The Museum of Memory in the ’90s

Source: Dazhong Dianping – The atmosphere of the nostalgia-inspired restaurant

The Continuous Past restaurant is a nostalgia restaurant located in Shanghai, China. The restaurant’s layout recreates the classrooms and the boys’ and girls’ dormitories of the 1990s. Complete with musician posters, a blackboard, magazines and books from the 90’s,  ustomers raved about the detailed design of the restaurant. Even the tableware and are the same as in old days, with a classic tin ‘lunch box’, and a  menu in the form of an exam paper. Many customers have commented that the restaurant took them back to their school days.

The restaurant serves customers’ daily cuisine and drinks and food that were popular in the 90’s. Additionally, the background music of the restaurant is also vintage, resonating with customers’ memory of school and youth time. For a cherry on top, the restaurant even has a school bell that rings every hour.

Tips for nostalgia marketing in China

1. Appeal to the senses

Research shows that senses are closely related to memory, and one familiar scent, sound, or image can cause a myriad of memories and feelings to arise. Therefore, in nostalgia marketing, think of how to appeal to these senses. The restaurant The Continuous Past, uses a school bell sound to cause customers to remember their school days. White Rabbit converts their traditional taste to a similar scent in their new co-branded products. There is even more opportunity to uncover in terms of music and scents that appeal to Chinese consumers.

2. Discover what was popular among the target during their children and teenage years

Between the ages of 12 and 22, dopamine is activated a higher levels. This causes people to have a greater connection to the music, media, and products they were exposed to during that time. For millennials this would be the 80’s and 90’s, a time when China had significantly less cultural influence from the west. If the target market is the silver generation, this would be even truer. Hence, it takes consumer research such as in-depth interviews or focus groups to uncover what your target market truly feels nostalgic for.

3. Co-brand with brands from the past

Fresh, new brands don’t have to miss out on nostalgia marketing. While at the same time, many old, cherished brands can create new opportunity through a second-wind. Co-branding is mutually beneficial in helping both brands expand their consumer base. White Rabbit, has renewed itself through co-branding with a variety of different young and hip brands, effectively turning it into a classic brand.

Author: Qing Zheng

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This article Nostalgia marketing in China：Case studies of brands sparking cherished memories is the first one to appear on Daxue Consulting - Market Research China.

However, against the backdrop of the COVID-19 pandemic outbreak, the e-learning market in China experienced a surge in market demand. With the school summer break commencing in July 2020, various online education institutions entered the battleground of recruiting students for extracurricular tutorials. The competition is intense since the online education market in China is filled with a large number of players, and the market share gained by each player is fairly small. The bottleneck of achieving profitability has not been loosened, according to Caixin. China’s e-learning market looks for more in-depth development and more complex technology to promote the next round of development.

The e-learning market’s competitive landscape has taken its initial shape with K12 online education sector growing rapidly

After 20 years of devious development, China’s e-learning industry realized large-scale monetization with the support of “live-streaming” in 2017. In 2018, with the initial formation of the competitive landscape and the intervention of the government, the online education industry began the initial stage of maturity. Market competition in 1st tier cities is saturating, while 2nd tier cities became the new battleground. 

Data Source: Statista, Market size of online education in China is growing as more players enter the market

As of 2018, the online education market in China reached 251.76 billion yuan, and the number of paying users reached 135 million. The major players in the online education market in China are Yuanfudao, Zuoyebang, Xue’ersi, and Baicizhan. Higher education and vocational training account for 75% of the total market share.

The K12 education sector in China has grown rapidly, and its share has almost doubled in the past 6 years. K12 online education apps also occupy a far larger share in terms of the number of MAU in all fields of education. As of November 2018, the top three e-learning apps with leading MAU are all K12 online assignment-based apps. This is probably related to the “excessive assignments tactic” in many elementary and middle schools in China, wherein students are encouraged to hone their skills with an abundant amount of homework.

Data Source: iResearch, K12 e-learning is growing in market share   

It is also worth noting that in 2018, online education has also been officially included in the scope of supervision of the education industry. The Chinese government has issued national standards and evaluation schemes for online courses, in which engagement is listed as an important dimension.   

Under quarantine, the online education market in China revitalized, but the core issues remain unresolved  

Due to the COVID-19 pandemic, schools of all types were postponed following the Chinese Ministry of Education’s notices. From February 10th to 28th 2020, the Chinese Ministry of Education issued a series of notices to provide guidance and measures to prevent and control the pandemic in the field of education.

Data Source: Baidu Index, Searches for online education surged during self-isolation period (Jan.- Feb. 2020, varies by cities) in China

Searches for online education on Baidu surged from late January to early February 2020. Moreover, searches for online education applications on the Apple Store, such as Zuoyebang and Xue’ersi, also increased significantly during this period of time. Yuanfudao, a leading online education platform, had advertized heavily on CCTV channels during COVID-19, leading to an increase of searches on the app store. 

Data Source: Qimai.com, Searches for Zuoyebang, Xue’ersi, and Yuanfudao searches on the Apple Store rose significantly during the COVID-19 self-isolation period. Zuoyebang remained the most popular online education application, whereas Yuanfudao showed the most dramatic growth thanks to its massive advertisements during the self-isolation period.

Despite market growth, homogenization, rough user experience, and fuzzy results still remain the core issues that hinder in-depth expansion of the online education market in China. With the intensification of homogenized competition, injecting huge capitals to boost growth has gradually weakened, whereas promoting growth through word-of-mouth and operation have received more attention. Online science eduation in China has lagged behind English tutoring, however we look at how COVID-19 boosted this market.     

Education System for Sciences in China is exam-oriented and routine   

The education system for sciences in China is  routine-oriented. From Year 1 to Year 6, students study Maths as a compulsory subject. After students enter secondary schools, all have to study Biology in Year 7, Physics in Year 8, and Chemistry in Year 9, in this order. Basic skills of Computer Science are taught from Year 7 to 9. These subjects are also tested in the Senior High School Entrance Examination, along with Chinese, Maths, English, Moral Character, History, Geography, PE.

When students enter Year 10 study, they have not yet chosen their orientation. Hence, students have to study all the subjects until Year 11, when they choose between either arts or sciences. Subjects under the sciences stream are Physics, Chemistry, and Biology, along with Chinese, Maths, and English. Students who chose the sciences stream don’t need to study arts subjects (Politics, Geography, and History). In Year 12, students continue to study the subjects under their chosen path.

In the College Entrance Examination, science students are tested on Physics, Chemistry, and Biology, along with Chinese, Maths, and English for the written part. It’s worth noting that arts students and sciences students work on different maths exam papers in the college entrance examination. Generally speaking, science education in Chinese high schools are fairly routine and exam-oriented, wherein students practice heavily on designed questions.

Limited scope of science education in schools gives birth to China’s online science education market; online Maths education market burgeoning

Due to the limited scope of science education in China, some parents will get their children involved in extracurricular learning clubs, such as robotics and coding. The ages of children attending such extra-curriculars is getting younger. In recent years, there are increasingly more K12 online sciences education platforms for the youth, especially online Maths education platforms.

The market segment and course types provided by online Maths learning platforms are quite similar, reflecting fierce competition in a homogenous market.  

By October 2018, there were four financing activities in the K12 online programing education sub-sector and 11 in online Maths learning sub-sector. 7 out of 11 suppliers gained capital, and most of them have large amounts of capital with over 10 million RMB. Compared to the online English learning market, which was developed much earlier and has entered into saturation, online maths education and programming training have become the hotspots of capital.

Zuoyebang, Xue’ersi, and Yuanfudao are the three leading online education platforms. However, instead of specializing in sciences education, these platforms provide full-disciplinary learning guidance services for elementary and middle school students. Yangcong Xueyuan (Onion Academy) is a leading online education platform focusing on K12 sciences education in China. Chengzhangbao is focusing on the training of children’s logical thinking and mathematical logic.

An interesting phenomenon is that people tend to enroll in classes across different platforms. Although these platforms are offering similar products and services, they still have minor differentiations regarding human resources, technology, user management, and foci of study.  

The prospect of online education market: An investment opportunity?

While there still remain core issues to solve in the online education market, we have seen emerging trends these years. The majority of online education platforms in the market offer an integrated solution to students, i.e. a comprehensive range of subjects, after-class homework, tutors, and online communities. There are increasingly more platforms specializing in science education, especially Maths learning, which are attracting significant investements. Moreover, the market has witnessed emerging trends of programing learning in early ages and adults learning data analysis for vocational needs.  

Data Source: YouGov, A survey results show that code/programming training starting from primary school as well as data analytics training and STEM education are considered to be the key accelerators for education development in Shanghai, China.    

Third-party (B2B2C) online education platforms, such as CCtalk, Tencent classroom, jioayu.taobao.com, which focus on adults education, also displayed a competitive advantage over traditional platforms in the market. Such platforms generally do not provide courses directly, but assume the role of middlemen, allowing the free inflow of a diversity of course types. They partner with educational institutions or individual teachers on one side and deliver content to end-users on the other.

The courses provided by these platforms varied from e-commerce marketing, Java to interior design, to name just a few. While the traditional B2C online education players tryied to differentiate in various segmentations, such platforms, backed by their Internet parent companies, aim at covering all usage scenarios and leverage online traffic to enter the market.

It’s expected that the growth rate of the online education market in China will remain at about 20% in the short term, with higher education and vocational training continuing to lead the market. However, there were many e-learning companies undergoing a state of loss, including Liulishuo and 51Talk. Loss is common in the e-learning market in recent years. However, the rate of loss has narrowed, and profitability is not indefinite. 

 In the future, online education companies are expected to achieve profitability, but the premise is to solve the fundamental problems of rough user experience and unpredictable results in order to further realize the survival of the fittest, increase market concentration, and ensure steady growth.

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This article The online education market in China is in a critical period is the first one to appear on Daxue Consulting - Market Research China.

China is the second largest cosmetics market in Asia and the fifth in the world. It has been a profitable paradise for foreign cosmetics brands for a long time. Foreign cosmetics brands in China own around 70% of the market. In 2018, P&G and L’Oreal had the biggest market share in China, with 25.8% and 21.5% accordingly. The American Procter & Gamble, the French L’Oreal, The Japanese Shiseido, the Anglo-Dutch Unilever and the American Estee Lauder are the key players in China’s cosmetic market.

Data Source: qianzhan, China’s cosmetic market share 2018 (foreign brands)

Chinese consumers’ behavior is evolving very quickly, due to the huge economic growth. Hence, the middle-class in China are more sensitive to their life quality and health-awareness. Therefore Chinese consumers have been more interested in using overseas products which have a long history and more refined products.

Marketing strategies of foreign cosmetics brands in China

L’Oreal is a huge success among foreign cosmetics brands in China

L’Oreal shows rapid growth in Chinese e-commerce

The French brand has grown ten-fold on e-commerce since 2011. It is the leader on e-commerce in China, which is the fastest growing channel for L’Oreal. In 2020 e-commerce already makes up 50% of L’Oreal’s China sales.

Data Source: L’Oreal Group Annual Reports, Percentage of Loreal China sales from e-commerce

The next step for L’Oreal is new retail: the combination of the offline and online channels. It includes such technologies as augmented reality, virtual reality, and artificial intelligence. Today L’Oreal in China already provides skincare diagnostic supported by artificial intelligence for Vichy on Tmall.

Foreign cosmetics brands actively use KOLs in such online platforms as WeChat and Weibo. For example, many celebrities like Li Gong, Zhilei Xin (Famous Chinese actresses) promote L’Oreal cosmetics among Weibo users. 

Personalization and co-branding are the key cosmetics marketing strategy in China for L’Oreal

More and more companies focus on offering personalized experiences for their customers. To create a more customized digital experience, L’Oreal has integrated technology to let people “try on” lipsticks by pointing their smartphone camera at themselves. The L’Oreal-owned Giorgio Armani make-up brand became the first luxury line to use the technology on WeChat. WeChat users can order them from Giorgio Armani Beauty’s mini-program shopping site. Users also can screenshot, save and share images as well as view before and after images to elevate the consumer shopping experience. 

Source: Cosmetic Design Asia, Loreal Group has launched of its Augmented Reality (AR) make-up try-on application ModiFace in China

L’Oreal’s quick rebound after COVID-19

The French brand reported that its China sales have seen signs of recovery since the COVID-19 outbreak. Despite overall sales for the quarter shrinking globally, L’Oreal China achieved high growth in March 2020. The CEO of L’Oreal Group, Jean-Paul Agon highlighted that the company’s performance in China was “remarkable”.​ “China was able to close the quarter at plus 6% which is pretty amazing when you think about the difficulty that they had due to the pandemic.”​ L’Oreal China recovered quickly due the early restoration of operation and wide usage of the online-to-offline model. Additionally, during the Women’s Day Festival on March 8^th, 2020, L’Oreal group launched an online shopping event in China to trigger sales.

In March 2020 sales of L’Oreal Group in China became positive again. That proves that using of online-to-offline model and social networks promotion were successful marketing strategies for L’Oreal in China, and especially boosted their sales through the tail end of the pandemic.

Estée Lauder tops the list of 100 most prestigious cosmetics brands in China

Estée Lauder targets young Chinese millennials

The beauty brand targets young millennials to tap into China’s booming cosmetics and personal care industry. Its shift away from older consumers is part of its long-term investment strategy in the country. Estée Lauder’s cosmetics marketing strategy in China is to position itself as millennial-focused. It quickly identified that tapping into the high spending ability of young Chinese consumers with specialized luxury lines is essential for its success.

To gain a clear, competitive edge over its rivals, it redesigned its marketing campaigns. For example, Estee Lauder in China increased digital engagement, leveraged social media platforms such as WeChat and Weibo. Additionally, like many other foreign cosmetics brands, it collaborated with the local celebrities.

Estee Lauder focuses on digital strategy

E-commerce in China has developed rapidly and is a popular way to shop for most Chinese. Thus, it took a specialized online strategy to adapt to the Chinese market. E-commerce represents approximately 30% of Estée Lauder’s business in its top markets. In 2014, the brand became one of the first high-end cosmetics brands to enter Tmall. They built a professional team with 50 persons to focus on the brand’s Tmall store and independent e-commerce shop. In 2017, the sales revenue of Estee Lauder Group in China had 40 percent growth. Notably, e-commerce accounted for 50 percent of that increase. Also, as a part of its cosmetics marketing strategy in China, Estee Lauder opened online stores for its sub-brands. It helped to bring more consumption to the Group.

Data Source: WalkTheChat Analysis, Evolution of Tmall flagship sales between March 2019 and March 2020

KOLs and special products push the sales of Estee Lauder in China

Estee Lauder invests heavily in digital marketing, social media, and KOLs. For example, Yang Mi, a famous actress in China, is Estee Lauder’s brand ambassador. Her first cooperation with Estee Lauder in February 2017 earned over one million shares on Weibo and brought over 500 percent more sales. Meanwhile, some popular KOLs in China helped to increase consumption. In 2019’s double 11 presales, Chinese actress Li Jiaqi sold over 0.4 million Estee Lauder’s Advanced Night Repair in a short time.

Estee Lauder’s matrix covers almost all categories of cosmetic products and price ranges, reducing the risk that customers switch brands as their preferences evolve. Notably, Estee Lauder Group launched a brand called Osiao in Hong Kong in mid-October, 2012. This brand is specially designed for the skin of Asian people.

P&G’s cosmetics marketing strategy in China highlights premium innovation and product mix

P&G launches a premium skincare brand in China

Unlike other top foreign cosmetics brands in China, Procter & Gamble (P&G) decided to put focus on the premium segment. In 2019 this American company brought a premium skincare brand called Oriental Therapy to the Chinese market. Chinese herbal medicine inspired the company to create this cosmetic line.

What makes it especially unique is that it meets skin’s different needs during the four seasons. According to Oriental Therapy’s Weibo post, the beauty line focuses especially on Chinese women.  The brand is now available via Tmall, WeChat, and Xiaohongshu shopping platforms. P&G believes that Oriental Therapy will fill the gap P&G has in its beauty offering in China. One of its key products, Springtime Hydrating Essence costs 450 RMB or 65 USD. The brand’s skin-care sets cost between 740 and 1140 RMB, or 107 to 165 USD.

Source: Weibo, Premium skin-care brand Oriental Therapy for China

However, P&G faces a lot of competition among foreign cosmetics brands. For example, companies like Estee Lauder and Shiseido are also upping the ante through launching new brands including DARPHIN and D-Program.

P&G uses Alibaba to sell in China

To expand its e-commerce P&G has turned to Alibaba Group, which operates the country’s largest online marketplaces. Alibaba also offers digital marketing solutions and access to a huge audience via its media ecosystem, including  Alibaba-related companies such as video-streaming site Youku and the Twitter-like Weibo microblogging site.

“E-commerce also plays a significant role in brand building, which is changing P&G’s century-long brand-building model.” – says Jasmine Xu, the company’s vice president for Greater China e-business and branding. Oriental Therapy has also opened a flagship store on Tmall, where it offers products in different combinations.

China is the second biggest market for Shiseido

Shiseido adopts cooperative cosmetics marketing strategy in China

In 2020 the Shiseido Group opened its first Beauty Innovation Hub outside of Japan at its flagship space in Shanghai.  Shiseido Beauty Innovation Hub represents a new way of working to drive consumer-centric solutions in China. At this space, Shiseido plans to collaborate with Chinese startups and disrupters, and create innovation which will deliver true value. Cooperation and localization, rather than head-on confrontation, is the strategy Shiseido takes. The Beauty Innovation Hub aims to work with local startups in the extended beauty space. On top of this, Shiseido in China plans to experiment and create new businesses. The hub serves as an open innovation platform for Chinese startups, opinion leaders, area experts, media and scientists.

Source: Medium.com, Shiseido Beauty Innovation Hub in Shanghai

Shiseido in China joins Tmall to promote online sales

In 2018, Shiseido revealed their New Retail strategy. A part of this strategy is a platform they developed called the “Shiseido Official Beauty Star Product Hall”.

In 2019, Shiseido signed a partnership with Tmall. It helped to develop new products based on what Chinese consumers are searching for on Tmall. The first co-developed products, a ‘mild and refreshing scalp shampoo’ and an ‘essence oil for split ends’ will launch on Tmall under Shiseido’s hair and body care brand Aquair. Shiseido said it expects e-commerce to generate 40% of its China sales by 2020.

“Without a doubt, whether it be e-commerce or digital innovation, Alibaba is the leader. Alibaba is one of the most important strategic partners for Shiseido China as well as for the entire group,” said Fujiwara, Shiseido’s CEO.

Data Source: Shiseido Annual Reports, Percentage of Shiseido China sales from e-commerce

Mary Kay uses scientific innovation in China

Mary Kay China targets young consumers

As Chinese consumers are more and more informed about beauty, Mary Kay is facing the challenge of developing interesting products. “In China​, beauty consumers demand for products and services are constantly increasing.

The current consumer trend of skin rejuvenation in China is strengthening, and the purchasing power of the 18 to 24 age group is rising,” said Katherine Weng, general manager of Mary Kay China. To cater to younger consumers, the company’s cosmetics marketing strategy in China is to create “bold and interesting” ​products. In 2019, it launched Pink Young brand in China. As company claims, “It’s the answer for today’s woman who wants to show her femininity along with her fierceness.”

In 2018, the company invested around $50 million in the Mary Kay Science and Technology Center, located in Shanghai. Additionally, the company sees the need to increase its online presence. It has launched a new channel which enables consumers to use WeChat to place orders with independent beauty consultants.

Mary Kay focuses on direct sales in China

Mary Kay is one of the world’s biggest direct selling enterprises of skin care products and cosmetics. Within a short time, Mary Kay China established its name among Chinese consumers and experienced steady growth in the country’s first-tier cities. Now, it has set up 35 branch offices across the country. When the company first began expanding beyond China’s big cities, its direct-sales model was new to consumers in China’s second- and third-tier cities.

Mary Kay has three key strategies. First, it drew up strict rules on how beauty consultants should conduct themselves and present Mary Kay products. Second, it developed advertising campaigns in a variety of regional print and broadcast media. Third, the management team established special training programs for consultants.

The sales force represents a competitive advantage. Consultants know their customers well. Such personal networks are vital because Chinese consumers tend to trust people with whom they have a good relationship. Their close relationships with relatives and friends would ease making follow-up visits to get feedback and introduce new products.

Summary of the marketing strategies of foreign cosmetics brands in China

Co-branding

Not many foreign cosmetics brands use co-branding as a key strategy. Co-branding helps brands “exchange” customers, and effectively expand their consumer base. As competition in the Chinese cosmetics market is fierce, such giants as L’Oreal or P&G have not shown interested in involving other brands for cooperation. Shiseido has another approach. It has its Innovation Center in Japan, where it also cooperates with other local brands. Thus, cooperation with the Chinese start-ups was a natural marketing strategy for this company.

KOL marketing

KOLs are popular social media users who can influence a wide audience. In China they usually post on WeChat or Weibo, but other platforms like Xiaohongshu can be considered depending on the target audience. Many foreign brands cooperate with them to expand their audience, especially among millennials. To gain new consumers and increase sales, L’Oreal and Estee Lauder chose this cosmetics marketing strategy in China.

Direct sales

Direct sales are a traditional channel for all foreign brands in China. However, as of 2020 most brands consider e-commerce as a key sphere for development. During the COVID-19 outbreak direct sales showed its vulnerability. Mary Kay is the brand which always had its special strategy of creating personal relations between beauty consultants and customers. Nevertheless, now Mary Kay in China is also considering using digital technologies to promote its products.

E-commerce

The target audience in the cosmetics industry is the post-80’s and post-90’s generations. They always keep up with the latest trends and care a lot about their appearance. One of the most effective ways to approach them is to find where they spend most of their time: online platforms and social networks. Most foreign brands widely use online methods to expand their influence in the Chinese cosmetics market.

Special products

Some foreign brands focus on a special approach to the Chinese market. They create products and sub-brands oriented on the Asian audience. It could be skincare products created specifically for Asian skin or inspired by the Chinese traditional medicine. That helps to increase customers’ loyalty and increase sales in the Chinese market.

Author: Valeriia Mikhailova

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<iframe src=”//www.slideshare.net/slideshow/embed_code/key/naoF39ytNoyFpJ” width=”595″ height=”485″ frameborder=”0″ marginwidth=”0″ marginheight=”0″ scrolling=”no” style=”border:1px solid #CCC; border-width:1px; margin-bottom:5px; max-width: 100%;” allowfullscreen> </iframe> <div style=”margin-bottom:5px”> <strong> <a href=”//www.slideshare.net/DaxueConsulting/the-cosmetics-and-personal-care-market” title=”The cosmetics and personal care market in China by Daxue consulting” target=”_blank”>The cosmetics and personal care market in China by Daxue consulting</a> </strong> from <strong><a href=”https://www.slideshare.net/DaxueConsulting” target=”_blank”>Daxue Consulting</a></strong> </div>

This article Marketing strategies of foreign cosmetics brands in China is the first one to appear on Daxue Consulting - Market Research China.

The founder of the Chinese e-commerce site Biyao, Bi Sheng was first to propose the C2M model in China. The C2M model is when consumers connect directly to manufacturers to purchase a product. In the C2M model, consumers place orders directly through the platform, and the factory receives consumers’ personalized orders.  

The C2M model short-circuits all intermediate links, such as inventory, logistics, general sales, and distribution. It cuts off all unnecessary costs, allowing users to buy ultra-high-quality products at ultra-low prices.

A major point of the C2M model is that it produces on demand. The user places an order first, and then the factory produces it. There is no inventory-sales ratio, which eliminates chronic inventory problems. The defining feature of a C2M model is highly competitive pricing brought about by connecting factories with consumer insights, such as preferences, location, and behaviors.

Victor Tseng, vice-president of corporate development at Pinduoduo said that “C2M is essentially evolving traditional manufacturing from an R&D and marketing-driven process into a consumer-driven process”.

Biyao – first C2M platform in China

A C2M model Chinese e-commerce platform, Biyao, started in July 2015. This is the first application of the C2M model in China’s e-commerce. This platform includes a number of companies in the automobile, home furnishing, clothing, eyewear and related industries.

After the user places an order on the platform, the order will be directly sent back to the factory. Then, the factory produces and delivers the order. E-commerce platforms can use big data to get customer group portraits and analyze consumption characteristics. It helps manufacturers to select products, transform processes and reduce inventory pressure.

Source: iResearch, Biyao C2M platform

Advantages of C2M model

First of all, C2M model realizes the direct connection between the user and the factory, removes all intermediate links, which increases the price. It also connects designers and manufacturers, and provides users with “big brand quality, factory price” products.

For consumers, the C2M model emphasizes user-centricity and organizes production according to users’ individual needs.

For manufacturing companies, the C2M model improves productivity and promotes the transformation of enterprise production lines, supply chains and internal management systems.

C2M in China as a driver of e-commerce

C2M in China is a new driver in the e-commerce landscape. In 2019, $420 million worth of C2M-related bookings and sales were made in a single day during China’s Double Twelve shopping day. According to data from iResearch, this figure reached $2.5 billion in 2018. Forecast shows it will reach $6 billion by 2022, which includes a compound annual growth rate of 24.4 percent. Though still a small percentage of China’s total e-commerce market, it’s a model that crucially enables brands to better address issues of inventory and supply chain efficiency. C2M is another indicator that brands which fail to listen to consumers on product preferences will miss a trick.

Data Source: iResearch, C2M in China market size

Big data and AI in China push the development of C2M in China

Companies like Alibaba and JD.com have both been utilizing C2M in China. JD.com, for example, has been testing the C2M model since 2017. The company launched its fashion technology research institute in 2018 to explore the application of AI, VR/AR in China, as well as big data.

Through the application of AI-powered data analytics, online retailers, consumer brands, and AI companies are jointly making mass-customization possible in China. The key for C2M is to connect consumers and manufacturers through data and computational infrastructure.

Young generation in China – the key users of C2M e-commerce platforms

Chinese millennials have diversified needs, while user channels have significant segmentation. They include a host of online marketplace platforms such as Taobao, Pinduoduo, and Douyin.

Customization options for consumers were previously costly and limited to luxury product categories. In the current e-commerce industry, the post-80s and post-90s generation is the key consumer group. The younger consumer groups have a stronger demand for product customization. C2M caters to the needs of personalized and differentiated products that young consumers pursued.

Data Source: iResearch, Age structure of Chinese online shopping app users 2019

Key e-commerce players in the Chinese market use C2M marketing

Pinduoduo is gaining popularity among Chinese consumers

Pinduoduo (拼多多) is an e-commerce platform that allows users to participate in group-buying deals. Using the app is simple, the consumer can buy a full price item or get a discount if they invite other people to participate in the purchase. After paying, there are many ways to invite friends, not only through WeChat, but also with QQ, QR code, image, or with a voice recording. In the end, they ship the discounted order when the required number of people purchase it.

It is especially popular in third and fourth-tier cities. More than 65% of users come from third-tier cities, while only 5.9% come from first-tier cities. Unlike other e-commerce apps such as JD.com or Taobao, it has decided to focus on small towns. This policy has made it possible to attract low-income families to the App. We can make a conclusion that people in the third and fourth-tier cities are more likely to use the C2M model.

Data Source: Statista, Pinduoduo user distribution in China as of October 2019, by city tier

In June 2018, less than three years after the launch, Pinduoduo’s monthly active users reached 195 million people. In 2020, 487 million shoppers use Pinduoduo for their online purchases every month. In addition, many international brands such as Huawei and Apple have launched their single-brand stores on the platform, further consolidating the company’s credibility.

Data Source: Statista, Number of monthly active users of Pinduoduo

Jiaweishi case

Shenzhen’s Jiaweishi is a manufacturer of brand-name consumer goods, including Philips and Whirlpool. In 2018, they established their own brand of robot vacuum cleaners. When they started selling online through Pinduoduo’s “New Brand Initiative” program, they got direct access to huge buyer traffic.

Following the success of the initial sales of the original robot vacuum, Jiaweishi is now able to greatly improve their product and further increase sales. Based on the data collected from Pinduoduo, the robot vacuum’s randomized cleaning route to a more orderly one. Besides, Jiaweishi redesigned product’s appearance to make it more appealing to consumers.
They also addressed consumer concerns with regards to the quality of an unknown brand’s product via live streaming videos. These live streams make the manufacturing process transparent to consumers, while simultaneously spreading Jiaweishi’s brand name.

The advantages of using Pinduoduo for manufacturers

E-commerce giant Pinduoduo has been able to tell manufacturers not only how to customize in great detail, but has also been able to advise on packaging redesigning and price point setting.

Pinduoduo saw the launch of 106 manufacturer-owned brands last year and is aiming to establish 1,000 more. Even automakers are engaging with C2M firms amid a prolonged slump in sales. Pinduoduo held a team purchase promotion with car dealers during the Double Eleven shopping festival in 2019. Some 3,100 cars from five major auto brands were sold in just nine hours. Carmakers were able to gain an insight into demand and better predict consumers’ intent to purchase. This could help them optimize manufacturing and save money at multiple stages, and these savings could trickle down to consumers.

JD.com enters C2M in China

JD.com rolled out its C2M unit Jingzao in 2018. The platform now offers products including custom shirts, luggage, towels, and bedding. Moreover, JD partnered with electronic brands such as Lenovo, Konka, HP, and Dell to develop tailored products under the C2M model.

In 2020 JD.com has signed a partnership with South Korean manufacturer LG Electronics to sell RMB 5 billion ($707 million) worth of products on the e-commerce platform. Under the partnership, the two companies will cooperate in a range of areas, including product development under the C2M model.  The two companies have already worked under the C2M model for small home appliances. In May 2018, they started to develop C2M air purifiers, beauty tools, hand-held vacuum cleaners, and clothing care steam “styler” systems based on JD.com data. 

Besides, in 2020, the Italian designer brand Sergio Rossi co-designed a new product based on JD’s big data analysis of customer preferences. The new product is a short boot (a style quite popular with JD customers) that features the brands’ recognizable Icona logo.

Alibaba launches C2M in China through Taobao

In March, Alibaba launched a new app on Taobao called Special Offers, which works with factories to create C2M products. Its goal over the next three years is to help 1000 industries build ‘super’ factories that can directly supply customers. By 2020, more than 500,000 factories and 1.2 million production-capable suppliers in China have signed up to the platform. Chinese apparel, sportswear, and fashion companies, such as Anta and Bosideng Group, have signed up for the app and opened authorized stores online. Bosideng already collects and shares information through enterprise resource planning that helps them penetrate consumer preferences and consumption habits.

Backed by Alibaba’s AI algorithms and cloud technologies, the C2M team was able to offer real-time analytics. It helps companies to respond to changing consumption trends and identify new growth points.

Data Source: Taobao, Taobao YoY sales growth on Women’s Day 2020

Odis case

Odis started producing car-cleaning products that consumers wanted and needed. These included portable sanitizing sprays containing at least 75% alcohol. In 2002, with the help of Alibaba, Odis was able to adjust its production lines in three days to create these items. The process would have taken Odis three months to complete on its own, said the factory. Based on analyses of consumer preferences, the factory also started making their sprays in plastic bottles instead of aluminum cans.

“Alibaba’s C2M team worked with us throughout the entire product-development process. We had a clear roadmap of exactly what consumers wanted and how many units they needed,” said Qu, Odis’s general manager.

To bring consumers closer to their products, Odis leveraged Alibaba’s digital ecosystem and organized a campaign on Tmall. It allowed consumers to pre-order the sanitizers in China before production kicked off. They sold more than 200,000 bottles of the spray within 24 hours. Alibaba also created a new section for car-sanitization solutions across its online marketplaces.

Thanks to the C2M team’s efforts, online sales accounted for more than 90% of Odis’ revenue during the pandemic. When the coronavirus spread overseas, Odis’ clients in other countries also started showing interest in the product. Since March 2020, the factory has sold close to 30 million more bottles overseas.

Prospects of C2M marketing in China

C2M model gains momentum during COVID-19 outbreak

First the US-China trade spats hit China’s huge manufacturing base with delays and uncertain revenue, which was then followed by the COVID-19 pandemic. Demand plummeted both domestically and overseas. The C2M model proved especially crucial during the COVID-19 outbreak in China. Factories across China had to halt production. Even when operations resumed, manufacturers have struggled to generate pre-pandemic levels of business.

When many of China’s brick-and-mortar factories found their production and sales channels disrupted during the Covid-19 crisis, digitization of operations became a new lifeline for survival. China’s e-commerce platforms are able to use their massive databanks of consumer behavior and algorithms to analyze and predict what China’s factories should make to respond to demand.

C2M will benefit in the long run

The move to C2M will benefit manufacturers in the long run. Firstly, it makes them more flexible in times of crises, by pivoting online and selling directly to users. Secondly, factories can also save an average of 20%-30% in production costs. The model has huge potential in China’s lower-tier cities. According to a study by Morgan Stanley, these consumers are in search of bargains but are also increasingly willing to pay more for things of higher quality.  Getting factories to embrace the C2M model, however, is not without its difficulties. Manufacturers need to be open to engaging with every step of production in order to succeed.

Author: Valeriia Mikhailova

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This article Prepare for the burst of C2M (consumer to manufacturer) in China: Pinduoduo, JD.com, Biyao is the first one to appear on Daxue Consulting - Market Research China.

China has been the world’s largest automotive market for years. That is why carmakers around the world are fighting to sell their cars to Chinese consumers. However, in a market mainly dominated by Chinese brands (42%), what are the trends and growth drivers that international carmakers can follow?

The automotive sector is one of the top pillar industries for China’s economy and a major employer. In 2019, for example, the automotive sector contributed 9.6% of the total retail sales of consumer goods. The sector also accounted for around 10% of total employment in China.

COVID-19 impact on the automotive industry in China: decline in sales

COVID-19 placed significant burdens on the automotive industry in China. Hubei Province where the outbreak started, accounting for about 9% of the country’s auto production. Wuhan, Hubei, as one of the key development cities of the country’s six major automobile industrial clusters, not only gathers many vehicle manufacturers, but also has more than 500 automobile parts enterprises.

The auto industry is especially facing major challenges both on supply and demand side—new passenger car sales in the Chinese market slumped by over 80 percent in February 2020. Forecast shows that China’s automotive market will decline 15.5% in 2020.

Data Source: Statista, PwC, China’s auto market size

China’s first quarter vehicle sales saw the biggest impact. According to the China Association of Automobile Manufacturers, sales of passenger cars declined 42.4% year over year during that period. SAIC, one of China’s largest manufacturers, reported a 44.9% percent drop year to date in April. Its SAIC-Volkswagen and SAIC-General Motors joint ventures, dropped 50.4% and 47.7% year over year in retail sales from January to April respectively.

Government policies to help the automotive industry in China

To stimulate the automotive market, government launched some policies. 10 cities released incentive schemes. For instance, Guangzhou announced a subsidy of 10,000 RMB for New Energy Vehicles sold between March and December. Additionally, a State-level subsidy to New Energy Vehicles was extended until 2022.

Epidemic highlighted imbalance of car brands in the Chinese market

The epidemic has exacerbated the imbalance between the various car brands. From January to March 2020, the total sales volume of the top ten enterprise groups was 3.295 million units. It had a year-on-year decrease of 41.7%, which was 0.7 percentage points lower than the industry decline. It accounts for 89.7% of total car sales, which is 1.1 percentage points higher than the same period last year. This shows that under the impact of the epidemic, the market share of small brands has shrunk even more.

A phenomenon worth noting is that compared with last month, the sales of major foreign brands also showed a rapid growth, of which the growth rate of Korean brands is particularly significant.

COVID-19 boosted electric cars market

China’s reaction to the crisis shows a commitment to new technologies, signaling how the crisis could build resiliencies moving forward. The real opportunity after COVID-19 lies in the shift from internal combustion engines to cleaner, electric vehicles in China. China is set to keep its long-term strategic goals for automobile electrification and meet climate change goals set by the Paris Agreement.

In March 2020, the production and sales of electric vehicles were also significantly better than that of the previous month. The growth rate was rapid and the year-on-year decline was narrower than that in February. For example, electric car maker Wei Lai released the delivery data for March 2020. The delivery volume reached 1533 units, an increase of 11.7% year-on-year and an increase of 116.8% month-on-month.

The auto industry in China slowly rebounds back

On February 2020, due to China’s recovery from the coronavirus outbreak, car companies ushered in the first wave of resumption of work. They include Geely Automobile, Great Wall Motor, Changan Automobile, Xiaopeng Automobile, Weilai Automobile, Tesla Shanghai Super Factory and so on. The outbreak of the epidemic has also made car companies pay more attention to the online car sales model. Many brands have launched online car purchase activities during the epidemic, thereby stimulating consumers’ desire to consume.

In March 2020, as the industry’s orderly resumption of production, the monthly production and sales volume rebounded significantly, but still did not reach sales level of 2019.

Data Source: China Association of Automobile Manufacturers (CAAM), China car sales 2019/2020

Retail sales of light passenger vehicles also surged ahead in March, as reported by the China Passenger Car Association. Year over year, March 2020 sales were still below 2019 levels, but 26%, not the 80% drop seen in February. Sales in April 2020 have begun to catch up with just a 2% drop year over year.

Automotive brands show signs of recovery

From the perspective of different brands, Changan Automobile sales reached 119,000 in April 2020, an increase of 32% year-on-year, ranking first. In April, the company achieved sales of 105,400 units, an increase of 44% month-on-month and 2% year-on-year. Great Wall Motor sold a total of 81,000 new cars in April, an increase of 35% month-on-month.

Chery Automobile increased by 15% month-on-month in April 2020, but continued to show negative growth year-on-year. 

Volkswagen’s China terminal sales in April 2020 were 16.57 units, an increase of 9.9% year-on-year and an increase of 41% month-on-month.

Weilai (also known as NIO) delivered 1,533 vehicles in March 2020, an increase of 117% QoQ.

Data Source: China Automobile Association, Weilai sales January-March 2020

Therefore, key automotive brands show the signs of recovery, however this process will take time.

In 2020, mainstream automakers supposed to have many new models launched on the market. However, due to the impact of the coronavirus epidemic, it is difficult to carry out offline listing activities such as test drive, auto show, and press conference.

Data Source: China Automobile Center, Summary of originally planned models to be launched in the first quarter of 2020

Chinese auto industry still has big potential

Despite the significant impact of COVID-19 on China’s automotive industry, the market potential is still quite huge. China is still expected to become the largest vehicle market with around 260 million units in operation. At 173 units per person now, there is room in China for more light passenger vehicle purchases.

However, after COVID-19, the market will definitely not simply snap back to where it was before the pandemic. According to a forecast from IHS Markit , light vehicle sales will decline 15.5% in China for 2020.

Why 2018 was a turning point for car manufacturers in China?

For the first time in twenty years, sales in the automotive industry in China are declining

In 2018, for the first time in 20 years, China saw its new car sales decline by 2.8%. In 2017, 28.88 million cars were sold in China compared to only 28.08 million in 2018.

Sales in most provinces of the China declined in 2018 except Guangdong, which saw an increase of 5.3% compared to last year, which can easily be explained by the rapid development of the local economy (Guangdong has had the highest GDP for 29 years in China).

Despite this decline, China remains the world’s largest automotive market, accounting for about 30% of total global car sales in 2018. Compared to the 28 million cars sold in China in 2018, only 5.2 million cars were sold in Japan, 16.5 million in Europe and 17 million in the United States in 2018.

But then what explains this decline in car sales in China?

Alternatives to cars are increasingly successful in China

One of the main reasons for the decline in car sales in China in 2018 is that there are many relevant alternatives. Chinese car shoppers are increasingly value minded and open to the alternatives to buying new cars. Moreover, the younger generation of Chinese is increasingly sensitive to environmental issues and tend to consider more environmentally friendly options.

In recent years, car-hailing apps have been gaining popularity in China. By the end of 2018, there were more than 100 car-hailing platforms in China, and the total number of car-hailing app users has exceeded 330 million.

This is the success of car sharing apps such as Didi Chuxing or bicycle sharing apps such as Mobike, which have seen their number of users increase in recent years:

Didi Chuxing

Didi is now one of the main alternatives to owning cars in China.

The business model of this Chinese transportation network company can be compared to Uber’s model. The cost of fares is very low and the simplicity of the service, easily ordering a fare on the app, make China gradually becoming the largest ride-hailing market in the world, with a value of US$30 billion.

In 2018, Didi held more than 80% of China’s ridesharing market.

Mobike

Mobike, a fully station-less bicycle sharing company in China, also offers a great alternative to private cars in China, especially in big cities.

Bikes are often used to connect to buses and subway stations, what we can call intermodality. For example, in Shanghai, approximately 1 in 5 users take bikes to make subway and bus connections (Mobike, 2018).

Thus China has now become the leading country both in terms of ride sharing and bike sharing in 2018, and this can be bad news for car manufacturers in China.

Second-hand car market shows growth in China

The Chinese craze for used cars is also an essential reason for the decline in car sales in China in 2018.

In 2018, second-hand car sales in China rise with a growth of 11.5%. Sales are even expected to reach over 20 million in 2019.

As consumers prioritize value for money, they become more price conscious and lose confidence with spending. Online marketplaces for second-hand cars, like Renrenche (人人车), Uxin (优信) or Guazi (瓜子), are also developing fast and allow customers to find the best price quickly without having to visit multiple brick and mortar shops.

Despite this, consumers continue to buy private cars in China, whether for practical reasons or for pleasure. According to the graph below, 58% of them buy a car to travel comfortably on holidays. Driving has been a very popular way of travel (average 300km) in China. In Tier-3 and Tier-4 cities, the school bus hasn’t been very popular, so many parents also need safe and convenient transportation for their children.

New-energy vehicles in China have become very trendy

Electric cars sales are increasing

Electric or hybrid cars have been very successful in recent years in China, thanks in particular to the support of the Chinese government but also because buying an electric vehicle avoids the cost of purchasing a license plate, which is a considerable saving.

In 2018, the sales of new energy vehicles in China consistently grew reaching 1,25 million units sold.

Buyers of new energy cars in China are mostly urban and young: 40% of China’s electric car sales in 2018 came from 6 large Chinese cities which are Beijing, Shanghai, Shenzhen, Tianjin, Hangzhou, and Guangzhou because of the awareness of the pollution problems inherent to combustion vehicles and the gasoline-car restrictions that have been implemented in these cities. Most of them are also the first person in their family ever to own a car.

China’s biggest electric carmaker: BYD

BYD Company Limited was China’s top-selling electronic car manufacturer in China in 2018. Created in Shenzen in 2003, the brand launched its first electric car model, the E6, in 2011.

In 2018 BYD sold a total of 520,687 cars in China including 247,811 electric vehicles, achieving a year-on-year jump of 25%.

The best-selling BYD model in China in 2018 is the Song, 91,426 units sold, for an average price of $28,000.

BYD’s marketing strategy in China is to develop a flexible and segmented offer to reach a wider audience: BYD then decided to go on all-in on hybrid rather than pure electric with one of its model, ‘Qin.’ It is a more flexible option for consumers, who can drive it as an electric car for their daily commute and reach much farther distance without having to worry about charging.

Thanks to its various plants in China the company also has a competitive advantage to integrate all of the key components in-house. And with the help of subsidies, BYD has been able to build economies of scale, pushing down their cost per unit and allowing them to spend more on research and development.

High-connectivity: Cars in China have to be mobile-first

Connected vehicles in China have to be mobile-first

A connected car is a vehicle connected to the Internet through its communication system. It allows the driver to connect his smartphone to the car, but also the car itself to connect to the surrounding cars and infrastructure.

Since China is a mobile-centric nation with mobile commerce representing a quarter of the country’s overall retail market ($1.5 trillion in sales in 2019), it is normal to find this requirement in the 2018 car trends in China.

Thus the global connected-car market in China is expected to grow 270% by 2022 and 41 million people will make use of in-car connectivity by 2021.

According to a 2017 Kantar TNS study, 79% of Chinese respondents plan to buy a connected car in the future, compared to about 50% for Americans and Europeans.

According to Jack Ma, Alibaba’s chairman, there is no doubt that the future of cars in China is high-connectivity:

‘’Today, 80% of your smartphone’s functions are not relevant to making phone calls or conversation. I believe that in the future, a car will have 80% of its functions not related to just transportation.’’

But Chinese consumers are more and more difficult to please in terms of connectivity services; they are seeking innovative in-car services and are even ready to pay subscriptions for content.

Which is why automakers and tech giants are all racing peers to new tech horizons!

Integration of Alibaba’s Tmall Genie in BMW vehicles

The partnership between BMW and Alibaba is an excellent example: Alibaba Group’s smart assistant, Tmall Genie, will launch in select vehicles from the BMW Group in China by the end of the year.

Tmall Genie will be fully integrated into BMW vehicles, offering drivers several entertainment and shopping options in the car. Drivers will be able to use Tmall Genie to buy online, watch movies, listen to music, check the weather or make appointments appointments in BMW.

Top innovative car brands in China

Volkswagen in China has delivered its 30 millionth car to Chinese customers

For the company which connection with China started in 1978, 2018 was a real milestone. They achieve sales record with 4.21 million vehicles delivered to customers in China including 196,300 imported cars, which corresponds to a + 0.5 % evolution compared to 2017.

The best-selling Volkswagen model in China is the Lavida with 504 000 units sold in 2018, a 4-door sedan which has been sold exclusively in China since 2008. Depending on the generation, its price is between 110,000 RMB and 160,000 RMB.

Because Volkswagen was the first foreign car manufacturer in China, it can now compete directly with Chinese competitors. And the brand’s communication strategy is really to emphasize this authenticity and improves its reliable brand image.

To do that, SAIC Shanghai Volkswagen wants to show how close to Chinese consumers it is.  At the end of 2018, a campaign announcing the launch of new models then revealed a desire to align the brand’s image with China’s powerful economic growth:

The timing of the publication, that was the 40th anniversary of the policy of openness and reform, was ideal.

To attract the growing target group of young, middle-class customers, Volkswagen also decided to launch JETTA as a brand in February 2019 (it was only a Volkswagen model before). The idea is to target first-time buyers, who account for 81% of the customers in the entry segment, by offering high quality, safety, stable value, and fresh design. In 2018, the brand also announced the launch of the SOL brand in partnership with the Chinese auto manufacturer Anhui Jianghuai Automobile, whose first model is an electric SUV.

Geely in China: ‘’Making Refined Cars for Everyone’’

Geely enters the automotive industry in China in 1997 and is now among the 500 largest companies in China. In 2010 Geely group bought the Swedish carmaker Volvo.

In 2018 Geely sold 1,500,838 units in China, an increase of 20.3% from 2017 and had a 6.9% market share.

The brand has a very young customer base with 51% of customers born in the 1990sor later, it’s a new generation of young innovative consumers who have a global vision and a global mindset. Thus, Geely communicates on high connectivity and ultra-modern design to directly target this audience. They often highlight their design teams and the famous designer Peter Horbury they work with to show their modernism.

The best-selling Geely model is the Bo Yue, a compact crossover SUV with 255 695 cars sold in China in 2018.

Geely is now trying to expand internationally by developing its battery manufacturing business with CATL Geely Power Battery Co. Ltd and acquiring new foreign brands like Proton’s Norwich-based subsidiary Lotus or Daimler recently. The brand also invests heavily in new energies cars with its ambitious project Blue Geely, wanting 90% of its sales to be consist of Evs in 2020.

Landrover in China: designing ‘’China SUV of the Year’’

Jaguar Land Rover entered the Chinese automobile market in 2010 and has witnessed exponential growth each year until 2018. A total of 492,388 Jaguar Land Rover units were sold in China in 2018.

Land Rover’s strategy in China is to demonstrate a commitment to the Chinese market by offering unique designs and models that meet consumer requirements and preferences. That is why in 2012, JLR entered a joint venture with Chery Automobile Company to manufacture Range Rovers to build vehicles designed specifically for the Chinese market (Jaguar XFL and XEL are good examples). Thanks to this, Land Rover in China has won numerous awards that allow it to raise brand awareness:  recipient of the 2018 ‘China Reputation Award’ for the second time, Range Rover Velar wins ‘China SUV of the Year’ and ‘China Car Design of the Year.’

How do carmakers promote their cars in China?

Offline promotion: How to keep a substantial brick and mortar presence for car manufacturers in China

Offline promotion remains very important in the automotive industry in China today. Indeed, despite the development of the massive development of e-commerce and m-commerce in China, nearly 90% of car purchases were made at 4S stores in 2018. This means that Chinese consumers still appreciate contact with sellers and want to be able to go to offline stores to get information and buy a car.

• 4S stores in China

4S stores are today the most popular distribution channels for the vehicle brands in China. There are more than 28,000 4S stores in China. They have dominated the offline purchase channels in tier-1, tier-2, and tier-3 cities; now they are expanding to tier-4, tier-5 cities and rural areas.

Consumers choose 4S stores as they provide all in one service: ‘‘4S’’ means Sale,  Spare part, Service and Survey. So, they cover all business related to vehicles such as sales (new cars and second-hand cars), maintenance, car wash, auto finance, car rental, etc.

It is also interesting to note that the competition among 4S stores is increasing, trying to fight on price, discount activities, test-drive services and insurance.

• Exhibitions, events, and shows: the entertainment marketing strategy

There are more and more events and exhibitions in China that attract millions of people each year. For instance, Auto Shanghai, the Shanghai Motor Show which has made its mark among international shows, host every two years more than 900,000 visitors from 18 countries. The 2019 edition is currently being held (April 23-28).

Automotive shows are an excellent way to stand out from the competition and showcase its best models to demonstrate the brand’s research and development capabilities.

Despite their international scope, the domestic players are most active at these shows with more than 70% of new products produced by Chinese carmakers.

• Showrooms, storefronts and flagship stores

Car manufacturers in China are now investing more and more in showrooms in major cities to impress consumers: stores are no longer just places to buy cars but luxury spaces to live a real experience.

In 2018 NIO invested CNY80 million (USD11.7 million) in a store in the iconic Shanghai tower and paid more than CNY100 million annual rent.

The brand also pays a yearly rent of about CNY80 million for a shop in Beijing’s Oriental Plaza mall.

Online promotion: Using KOLS and social media to boost your sales in China

In China, websites and social media are dominating the promotion channels for vehicle brands in 2018.

With a perfect online service layout, automotive E-commerce platforms have real marketing advantages. Automotive E-commerce represented by Youxin, Emao, and Taobao makes full use of the business sector (new cars, used cars and auto finance). They are user-centric, E-commerce data-based, product and service innovation-oriented, aiming at creating a  full life cycle Eco-marketing platform. It is a good source of information before buying a car in China.

Also, almost half of consumers obtain information about cars from automotive websites, since those websites usually have comprehensive knowledge about car brands and models.

On social media, young auto enthusiasts (post-90s and younger) have a stronger willingness to share content about vehicles with others. Half of the auto enthusiasts spend 5-15 minutes on every online post (website and social media) about vehicles.

Social networks have therefore become strategic for car promotion in China. This is why many brands now use KOLs (Key Opinion Leaders) to convey messages in a more subtle way. Indeed, more than 70% of vehicle consumers follow at least three KOLs, their purchasing behaviors are highly influenced by KOLs’ opinions and experience.

New retail: How the Alibaba strategy applies to the Chinese automotive market

New retail in the automotive market in China is more consumer-centric.  This is a trend that has been widely followed by car manufacturers since the success of Alibaba’s New Retail strategy launched in 2016.

By collecting consumers’ data (such as interests, price and design preferences), vehicle brands are able to provide cars, auto-configuration and services based on consumers’ requests. Thus, the consumer’s journey is shorter because the touch points are blended: for example, Wechat content is now a touch point for each step of the car buyer journey in China.

This is the strategy that Ford decided to implement in partnership with Alibaba: they launched the Super Test-Drive Center in Guangzhou to allow people to buy a car from a staff-less machine in under 10 minutes.

Customers just have to go to the Tmall app and choose the model they want to test-drive via the online catalog. To register, customers must take a picture of their face and once in the store, once the customer shows their face to facial recognition,the car chosen online arrives from the multistory structure. Then, the customer can test the car for a few days (3 days max) and order it online.

How could international carmakers improve their marketing strategy in the Chinese market?

Target a young audience

New cars buyers in China are young and connected consumers. As they gain purchasing power, they are the future of the Chinese automotive market.

Do not neglect offline communication channels

The paradox of the explosion of e-commerce in China is that buyers are still demanding physical presence or human contact. Thus, offline channels must be up to the task.

Keep a close eye on your online reputation

Control your reviews and comments and opt for an influence marketing strategy because brand reputation plays a vital role in the buying cycle of a car in China.

Rely on well-made design

Content and design provide an important first step in customer experience in China in 2019: work on a modern and sophisticated design for your website, your products, and your communication.

Leverage to e-commerce and new retail

For automakers, innovation linked to the e-commerce platforms and deepening relationships with end users will be key to benefit from the increasingly technology-enabled car market in China.

Author: Steffi Noël

Daxue Consulting offers further analysis of the automotive market in China with a forward-thinking approach to topics such as digitization, high-tech implementation, artificial intelligence, and many others. To know more about the evolution of the automotive industry in China, do not hesitate to contact our project managers at dx@daxueconsulting.com.

This article Automotive industry in China: How carmakers compete for first place is the first one to appear on Daxue Consulting - Market Research China.

Bayer AG is a global enterprise with core competencies in the life science fields of health care and agriculture. Bayer, headquartered in Leverkusen, Germany, is one of the most famous companies among the world’s top 500 enterprises. In 2019, the total number of Bayer’s employees was 103,824 and the annual sales were 43.5 billion euros. Bayer’s products cover high polymer material, medical and health products, chemical industry products, and agricultural products. Bayer puts a lot of emphasis on its research and development. Its capital expenditures amounted to 2.9 billion euros, R&D expenses to 5.3 billion euros in 2019.

Bayer’s current state in China

Bayer entered the Chinese market in 1982. Bayer has operated its business in Hong Kong, Taiwan, and mainland China. Currently, China has become one of the largest markets for Bayer globally and an important driver for the growth of Bayer’s business. In 2019, Bayer’s sales in Greater China reached 3.724 billion euros. As of December 2019, Bayer has more than 9,000 employees in Greater China.

Bayer is deeply rooted in the Chinese market

Source: Quanjing, China’s pharmaceutical industry

The Chinese market is a crucial driver of Bayer’s growth. Bayer complies with the policy and regulations of China, exploring its business in line with specific rules in China. Two examples that Bayer China firmly supports China’s regulations are as follows.

Bayer cuts price largely to win contracts with the Chinese government

In 2018, China’s government launched the centralized procurement program, in order to lower drug prices. A lot of drug companies are invited to place bids after the number of different kinds of drugs that will be needed in the public hospitals are determined by China’s health care security authorities. Under this centralized procurement program, the drug company which offers the lowest price will become the supplier of a certain drug. The Chinese government aims to reshuffle China’s pharmaceutical industry through the price war, and both foreign and domestic players have to come up with survival strategies to secure the market.

According to Chinese media, in January 2020, 77 pharmaceutical companies won contracts with the government by cutting drugs’ prices by 53% on average. Among them, Bayer made a big offer in the bidding. For example, it cut the price of its off-patent acarbose for diabetes (which affects a large part of the Chinese population) by almost 90%, and the new price is 78.5% lower than the price ceiling set by the Chinese government in December 2019.

By adopting an ultra-low-price strategy in the price war, Bayer hopes to expand its market share of some drugs like acarbose. In this way, it can secure its Chinese market and earn more profits in the future. For Bayer, the Chinese market is so important that it worth taking the large price cut to support the price war launched by the government.

Bayer fired an employee for breaking home quarantine rule during COVID-19

Bayer fired an Australian Chinese employee for breaking the coronavirus quarantine rule in China. In March 2020, a video of the woman gbreaking the home quarantine policy to go on a run went viral on the Chinese social network and drew widespread criticism from the public.

Bayer’s response reflects that it firmly follows laws and regulations in China, and supports the coronavirus rules of the Chinese government. This decision has been widely applauded by Chinese netizens and the company is considered as responsible and compliant. Hence, Bayer China has built a positive image through this crisis. 

Boosting innovation and advance digitalization

In 2016, China announced the Healthy China 2030 Blueprint. Currently, China is speeding up the initiative and improving patients’ access to medicines by increasing their affordability. “With the mission of helping China achieve health goals, Bayer China will make unremitting efforts to bring innovations faster to Chinese patients and provide more complete medical services.” Jiang Wei, executive vice president and managing director of Bayer China, said.

Bayer strengthened R&D and innovation

Under the Healthy China 2030 plan, China has promulgated policies from various aspects to increase support for the development of innovative drugs. Many pharmaceutical companies, including Bayer, are seizing opportunities and making full use of policy support to accelerate the approval of various new drugs in China.

Since 2017, Bayer has brought 14 innovative drugs to China. As an important part of the “China Innovation Strategy”, Bayer is continuously accelerating the introduction of more innovative products into China through the China R&D Center. The China R&D center, established by Bayer Health Consumer in Qidong, Jiangsu, is also actively carrying out category innovation, and enhancing the technical support and protection level of existing listed products.

At the same time, Bayer establishes long-term strategic cooperation with China’s top scientific research institutes including Tsinghua University and Peking University and strives to apply more cooperation results to the in clinical practice. Also, Bayer China is exploring cooperation opportunities with Chinese pharmaceutical companies and biological start-ups, leveraging the complementary advantages of both parties to fully develop innovative results. For example, Bayer and CStone Pharmaceuticals collaborate to evaluate D-L1 monoclonal antibody CS1001in combination with regorafenib as a treatment for multiple cancers.

Bayer China embraces digital transformation

Source: creamandpartners.com, Bayer cooperates with VeChain

Bayer has seen great potential to foster digitalization in China’s pharmaceutical industry, and has sped up its digitalization.

In 2017, Bayer teaeds up with Alibaba Health (AliHealth) to provide Chinese patients with healthcare services ‘at their fingertips’. At the same time, Bayer China can follow health trends of Chinese people and better satisfy their self-care demands by leveraging the big data advantages of the Alibaba platform.

Bayer re-started the ‘Bayer G4A China’ program in 2019, a global digital health startup partnership program to select Chinese startups that have digital potential. In 2019, Bayer China forms a co-operation agreement with Yaoshibang, a domestic online B2B pharma platform, to offer a new digitized medicine and health services solution in China. During this collaboration, the parties will exploit their advantages in the fields of medicine, health, and the internet.

In 2020, Bayer announced its partnership with VeChain, a pioneering public blockchain startup, to co-establish CSecure, a blockchain-based traceability platform for drugs. This new blockchain-powered solution will allow Bayer to track clinical drugs across the supply chain digitally.

Bayer considers digitalization as its vital strategy in China’s pharmaceutical industry. Digital transformation will enable Bayer to provide patients with new drugs and personalized treatment faster, improve the efficiency of healthcare service, and ultimately better serve patients. 

Bayer’s China Vision & Mission

Source: Bayer China’s Weibo, Bayer’s logo

With its strong marketing strategies, crisis management, and cooperation with the government, Bayer China devotes itself to provide better products and services for Chinese in the areas of health and nutrition. Bayer is a key player in helping China achieve the Healthy China 2030 plan, which makes the future outlook for the pharmaceutical brand’s development in China very promising.

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Founded in 1946 by French designer Christian Dior, Dior is one of most famous fashion luxury brands in the world. Since its founding at Avenue Montaigne in Paris, Dior has always been synonymous with magnificence and elegance. The first womenswear collection by Christian Dior in 1947 caused a global sensation while leading the “New look” revolution. Until now, whether in fashion, cosmetics or other, Christian Dior has always been at the top of the fashion luxury industry. As China makes up 40% of the global luxury market, Dior also considers China as a major market. At the same time, Dior in China approaches Chinese luxury customers from both product side and creative side.

Source: Dior.com – The new look of Christian Dior

The fragrance, makeup and skincare products are under Parfums Christian Dior division has more than 300 points of sales at the moment in China.

Parfums Christian Dior

From year 1973 on, Dior has had its own R&D center. Over 200 specialists, biologists, pharmacologists and researchers cooperate with over 20 R&D centers in the world’s top universities and science institutes to develop the best products. Dior has always put tactile impression of products as an important factor. All its products bring a perfect combination of technology and joy.

The beauty division (Parfums Christian Dior division) of Christian Dior maintained strong growth, driven by the success of its classic perfume, makeup and high-end skincare lines. Perfume such as J ‘Adore, Miss Dior and Sauvage are big success in the market. Cosmetics, including Rouge Dior and Ultra Lipstick collection lead a trend among customers. Also, the high-end skincare products are growing well, especially in the Asian market. Dior is the #2 luxury brand in China’s perfume market.

Dior Pink City: Dior in China plays with pop-up stores

Source: Sohu.com – Dior Pink City is coming to Shanghai. A beautiful Pop-Up store in a fashion-savvy Chinese city.

After launching the Dior Pink City pop-up store in Macau, the pop-up store came to Shanghai in July 2019. As the first station in Mainland China, Dior made five themed rooms in the pink city, including Dior pink flower shop, Dior pink library, Dior pink urban spa, Dior pink music hall and Dior pink café.

In the Dior Pink City pop-up store, consumers had the chance to experience personalized fragrance trial services, get bouquets of elegant flowers, and relax and get massages in the spa area, experience High-end skincare Dior Prestige, print exclusive photos and finally get small surprises crafted by Dior.

Dior in China entered E-commerce on Tmall

Tmall, owned by Alibaba group, now offers more than 3,000 beauty brands and the proportion of well-known brands the platform to launch their online stores. The big name brands which have official stores on Tmall rose from 555 in 2015 to 84% in 2018. According to Alibaba, Over 3 million women buy at least five tubes of lipstick on Tmall each year. Additionally, affected by the COVID-19 epidemic, COVID-19 pandemic, luxury and fashion brands are paying more attention to Chinese e-commerce platforms.  Just after launching the brand-new Bobby handbag collection, Dior in China had new, strategic moves.

On June 2020, Dior launched its own official Tmall store, right before the Chinese online shopping carnival 6.18. However, only products of skincare, cosmetics and perfumes were available on the Tmall store. So far, Dior has already gained 335k fans within one month.

Dior collaborated with Liu Yuxin

Source: qianlong.com -celebrity live broadcast on Ju Huasuan came to next level

During the Covid-19 quarantine, the Chinese TV show ‘Youth with you II’ has been extremely popular among Chinese, especially among young Chinese consumers. The TV show aimed to select 9 girls to form a girl music band. Liu Yuxin won the first prize for her impressive performance and high popularity. Dior announced collaboration with Liu Yuxin on skincare collection ‘Capture Totale’. The live broadcast on Ju Huasuan (a group buying website) with Jing Tian (Chinese actress, also official ambassador of Capture Totale) helped Dior in China received more than 3k orders and over 2.5 million RMB revenue.

THE9, the girl music group that Liu Yuxin belongs to, was invited to collaborate with Dior for its Bobby bag.

Source: twoeggz.com – Dior invited the new group THE9 to promote BOBBY

Christian Dior Couture

Besides maintaining the brand’s unique style and elegant brand image, Dior fashion division (Christian Dior Couture division) also has launched its official account on popular Chinese social media platforms.

Dior has introduced limited edition Lady Dior bag for Chinese valentine’s day

Luxury brands, such as Burberry, started to use WeChat Mini programs to plug into digital China. For Chinese Valentine’s Day in 2016 (Qixi Festival), Dior launched a WeChat mini program for selling its limited edition Lady Dior China valentine bag. For this bag, Chinese luxury customers choose the decorative embroidery pattern on the strap. The bag was sold out within a few hours on the first day of the WeChat Mini program marketing campaign.

Dior in China made a great effort on doing local Chinese social media campaign and marketing campaign to reach a wider range of customers.

Source: luxexpose.com – Lady Dior Small China Valentine Bag Sold Out Within Few Hours Via WeChat

Dior became the first luxury brand to enter Tiktok and Bilibili

In the past few years, Dior launched its official accounts on popular Chinese social media, such as Weibo, Wechat and Red. On August 2018, Dior launched its official account on Tiktok (known as Douyin in China), making it the first luxury brand to use the platform. So far, Dior has more than 491.1k fans and 3.6m likes with 628 posted videos.

For luxury brands, Bilibili represents a chance to capture young Chinese customers, Gen Z consumers in China and familiarize them with their products and brand ethos. Generation Z accounts for 81% of the platform’s user base according to QuestMobile. The advantages are clear: although they may not have significant buying power now, this generation is expected to account for 55% of total luxury spending by 2025. Dior launched official account on Bilibili on June 2020 with totally more than 7k fans, 22 videos and 132k plays within a month. At the same time, Dior is also the first luxury brand to use Bilibili.

Dior will launch an exhibition in Shanghai

Chanel’s Mademoiselle Privé exhibition in Shanghai in 2019 attracted a large number of Chinese visitors. Dior launched its Miss Dior exhibition after, and invited many of Chinese celebrities. This year, Dior will launch its exhibition in Shanghai ‘Christian Dior Designer of dreams’. Different from Chanel, the exhibition of Dior will showcase more than 70 years of the brand’s artistic creation to Chinese luxury consumers from an unprecedented Chinese perspective.

Source: Dior official WeChat account – The exhibition “Christian Dior, Designer of Dreams”

The exhibition will last about three months. Together with 8 well-known Chinese artists, this exhibition will open a new chapter in the history of Dior in China. A host of masterpieces, including 275 couture gowns, manuscripts and works by artists, are ready in the museum. Next the brand is inviting Chinese luxury consumers to explore Dior’s elegant world and spirit of the pursuit of dreams.

At the same time, the opening ceremony of the exhibition will be broadcast simultaneously on several Chinese social media, including Dior’s official Weibo account, official WeChat mini program and official Tmall flagship store. Additionally, Tencent video and Huawei video will also broadcast the activity.

Author: Qing Zheng

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This article Dior in China: A prime case of luxury fitting into a Digital China is the first one to appear on Daxue Consulting - Market Research China.